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PUBLISHERS     OF     BOOKS      F  O  R_/ 

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My 


EXPORT 
MERCHANDISING 


BY 

WALTER  F.  WYMAN 

sales  and  export  manager,  the  carter's  ink  company;  honorary 
chairman,  boston  export  ho0nd  table;  honorary  president,  export 
managers  club  of  new  york;  vice  chairman,  committee  on  foreign 
trade,  national  association  of  credit  men;  committee  on  foreign 
trade,  national  association  of  manufacturers;  chairman,  commit- 
tee on  educational  exhibits,  international  trade  conference; 
committee  on  foreign  trade,  association  op  national  advertisers, 
incorporated;  American  committee  on  distribution  and  committee 
ON  reciprocity  for  commercial  travellers,  international  chamber 
OP  commerce;  author,  direct  exporting,  utilizing  time,  henryville 

8TORIES. 


FiHST  Edition 


McGRAW-HILL  BOOK  COMPANY,  Inc. 
NEW  YORK:  370  SEVENTH  AVENUE 

LONDON:  6  &  8  BOUVERIE  ST.,  E.  C.  4 

1922 


Copyright,  1922,  by  the 
McGraw-Hill  Book  Company,  Inc. 


THE    MAPLE    PRESS     -     YORK    PA 


-5  5031 

ACKNOWLEDGMENT 

^        The  author  wish(>s  to  express  to  the  export  fraternity  his 
great  indel)tedness  to  those  who  ]\y  years  of  exeliange  of  infor- 
mation and  fact,  preeept  and  prineiple,  liave  made  this  vohnne 
p  possflDle. 
1^      Specific  acknowledgment  is  (hie  to  the  Boston  Export  Round 
^  Table,  the  Export  Managers  Clul^  of  New  York,  and  the  Bureau 
^  of  Foreign  and  Domestic  Commerce  for  their  investigations  and 
improvements  in  the  field  of  export  trade,  from  which  many 
♦  examples  have  been  selected. 
V      The  constant  counsel  of  Henry  H.  Morse,  Chairman  of  the 
^  Boston  Export  Round  Table,  has  been  that  of  a  collaborator 
<**  in  the  entire  text,  rather  than  that  of  a  critic.     Mr.  Morse  is  all 
but  entirely  responsible  for  the  important  description  of  methods 
of  pricing  of  goods  for  export  and  for  certain  paragraphs  relating 
to  indirect  exporting. 

Professor  Harry  R.  Tosdal  of  Harvard  University  has  kindly 
\ ''  made  many  and  valuable  suggestions  which  have  led  to  improve- 
^  ments  in  the  text  itself  and  in  the  arrangement  of  the  text. 
Acknowledgment  is  also  made  to  Professor  Tosdal  for  his  earlier 
laying  out  of  several  chapters  of  this  book. 

Formal  appreciation  is  here  expressed  of  the  courtesy  of  the 
publishers  of  Advertising  and  Selling,  American  Academy  of 
Political  and  Social  Science  Quarterly,  Business,  Current  Affairs, 
Export  American  Industries,  Export  Trade,  Leslie's,  Modern 
Methods,  Printers'  Ink,  System,  The  World's  Markets,  The 
World's  Work,  and  of  the  Business  Training  Corporation  for 
permission  to  use  material  prepared  for  their  pul)lications  Ijy 
the  author. 

Walttor  F.  Wyman. 
Cambridge,  Mass. 
August,  1922. 


FOREWORD 

"No  business  man  can  judge  the  prospects  of  his  industry  without 
taking  world  market  and  transportation  conditions.into  account,  any 
more  than  he  can  operate  a  river  steam-boat  without  taking  the 
world-wide  lunar  tides  into  account." — Edward  N.  Hurley. 

International  commercial  exchange  affects  the  comfort, 
convenience  and  net  income  of  every  man,  woman  and  child  in 
the  United  States.  For  our  comfort  and  convenience  we  must 
import  food  stuffs  and  metals,  rubber  and  textiles.  Our  incomes 
are  affected  both  by  the  prevailing  costs  of  imported  products 
and  materials  and  by  direct  and  indirect  taxation — which  is 
based  upon  exports  as  well  as  imports. 

This  volume  describing  the  phases  of  Export  Merchandising 
has  been  prepared  for  the  American  manufacturing  exporter 
and  for  all  others  who  participate  in  the  exportation  of  American- 
made  merchandise.  Its  chapters  have  purposely  been  sequenced 
for  those  with  an  academic  as  well  as  those  with  an  immediate 
business  interest  in  the  securing  of  profits  from  overseas  sales. 


IX 


CONTENTS 

Page 

Acknowledgment vii 

Foreword ix 

CHAPTER  I 

Common  Sense  in  Export  Trade 1 

The  Justification  of  Exporting  is  Profit.  Export  Trtulo  is  Merely 
Selling  Goods  in  Markets  New  to  the  Merchandiser.  Exporting  is 
no  Longer  "the  Great  Business  Adventure."  Organization  and 
Selling  are  the  Common-sense  Problems  of  Foreign  Trade.  No 
Mystic  Recipe  Needed  to  Enjoy  Foreign  Profits.  Export  Trade  is 
Based  on  Common  Sense. 

CHAPTER  II 

Export  Trade  as  Insurance 9 

Export  Trade  is  the  Only  National  Insurance.  Overseas  Sales 
Provide  Safety  Factor  Against  Periods  of  Domestic  Depression. 
In  Panic  Years  at  Home  the  Exporting  Manufacturer  Reaps 
Greatest  Reward.  Exporting  Protects  the  Individual  Enterprise, 
the  Community  and  the  Nation.  Advantages  Which  Accrue  to  Ex- 
porters in  Their  Domestic  Fields. 

CHAPTER  III 

Export  Policies — Their  Whys  and  Wherefores 12 

Why  Export  Policies  are  Indispensable.  Policies  Must  be  Extab- 
lished  to  Protect  Rights.  Efficiency  Demands  Establishment  of 
Policies.  Success  in  Foreign  Trade  Depends  upon  Establishment 
of  Sound  Policies.  Policy  of  Executive  Control.  Methods  of 
Executive  Control.  Manufacturing  Policy.  What  Products  shall 
be  Exported.  Price  Policy.  How  to  Price  Merchandise  for 
Export.  Sales  Policy.  Credit  Policy  Essential.  Important 
Points  to  be  Considered  in  the  Administration  of  Advertising 
Policy. 

CHAPTER  IV 

Organizing  for  Exporting 23 

Vital  Factors  in  Organizing.     The  AlUed  Company.     The  Selling 


xii  CONTENTS 

Page 
Company.  They  Separate  Export  Department.  Cooperation 
between  Departments.  The  E.xport  Appropriation.  Items  of 
Export  Expense.  The  First  Year  in  Exporting.  A  Typical  First 
Year's  Export  Appropriation.  Later  Appropriations.  How  to 
Use  an  Experimental  Appropriation  Effectively.  Personnel  of 
Typical  Export  Organizations. 

CHAPTER  V 

The  Export  Department 40 

The  Importance  of  the  Export  Department.  Division  by  Nature 
of  Sales.  By  Territories.  By  Types  of  Activities.  Analysis  of 
Export  Department  of  the  Miller  Rubber  Company.  Formula  for 
the  Organization  of  the  Small  Export  Department.  European 
Export  Departments.  System  of  Advancement  in  Europe  and 
the  United  States  Contrasted.  Examples  of  the  Workings  of  the 
Conference  Export  Department. 

CHAPTER  VI 

The  Location  of  the  Export  Department 47 

Importance  of  Correct  Location  of  Export  Department  now  Ac- 
cepted. List  of  Advantages  of  Seaboard  Location.  Admitted 
Advantages  of  Export  Headquarters  at  Factory.  Examples  of 
Profit  Arising  from  Seaboard  Location.  Use  of  Seaboard  Location 
in  Abnormal  Times.  Personal  Advantages  of  Export  Manager 
Located  at  Factory. 

CHAPTER  VII 

The  "Built-in"  Export  Department 56 

Coordination  of  Departmental  Effort  the  Backbone  of  the  'Built-in' 
Export  Department.  Team  play  within  an  Enterprise  Capitalized. 
The  'Built-in'  Export  Department  as  an  Integral  Part  of  a  Business. 
A  Trip  Through  Such  a  'Department.'  Examples  of  Departmental 
Practice  and  Procedure.  Conferences  Under  the  'Built-in'  Idea. 
Ten  Years'  Experience  of  The  Carter's  Ink  Company. 

CHAPTER  VIII 

The  Export  Manager 68 

Placing  the  Responsibility  for  E.xport  Initiative.  Qualifications  of 
the  Export  Manager.  Methods  of  Development.  Transfer  of  a 
Domestic  Sales.  Executive  to  E.xport  Management.  Detailed 
Example  of  the  Training  of  an  Export  Manager.  What  an  Export 
Manager  Should  Know.  Example  of  Correct  Use  of  Statistics. 
Broadening  Effects  of  Study  of  History  of  International  Commer- 
cial Exchange. 


CONTENTS  xiii 


Pack 

The  Combination  Export  Manager 80 

Definition  of  the  Combination  Export  Manager.  Types  of  Organi- 
zation Employing  Combination  Export  Managers.  Differing 
Methods  of  Compensation  and  Authority.  Webb  Act  Combina- 
tion Export  Managers.  True  Nature  of  Relation  with  Manufac- 
turer. Problems  of  Organization  and  Finance.  The  Three  Prob- 
lems to  be  Solved.  Examples  of  Necessary  Financing  of  Combina- 
tion Organization.  Combination  Export  Manager  Must  Combine 
Qualifications  Unneeded  in  Ordinary  Export  Managership.  Ob- 
stacles Which  Must  be  Overcome.  Building  up  a  Clientele. 
Organization  Problems. 

CHAPTER  X 

Securing  and  Training  Export  Salesmen 94 

Definitions  of  a  Salesman.  The  Salesman  as  the  Most  Powerful 
Selling  Force.  As  the  Keystone  of  the  Well-balanced  Export 
Campaign.  Cost  of  Export  Travelers.  Modern  Exporting 
Demands  More  Salesmen.  Qualifications  of  the  Export  Salesman. 
Sales  Ability  of  First  Importance.  Needs  as  Linguist  Often 
Secondary  to  Clerical  Accuracy.  Knowledge  an  Export  Salesman 
Should  Have.  Importance  of  Greatest  Care  in  Selection  of  Export 
Salesman.  Invariable  Courtesy  a  Requisite.  Example  of  Intensive 
Training  of  an  Export  Salesman. 

CHAPTER  XI 

Preparing  the  Field  for  the  Export  Salesman 108 

Fallacy  of  "Introductory  Trip"  Exploded.  The  Exporter  Sales- 
man Should  Not  be  Permitted  to  be  an  Explorer  or  Discoverer. 
System  in  Preparing  Field  for  Salesman.  Methods  of  Creating 
Dealer  and  Consumer  Acceptance  Portrayed.  Use  of  Mails  in 
Preparing  Field  for  Personal  Visit.  Use  of  Advertising  in  Advance 
of  Salesman's  Visits.  How  the  Exporting  Manufacturer  can 
Multiply  Salesman's  Efficiency. 

CHAPTER  XII 

Preparing  the  Export  Salesman  FOR  the  Field 113 

Equipment  of  the  Export  Traveler.  Physical  and  Dental 
Examination.  Vaccination  and  Innoculation.  Funds.  Supplies. 
Motion  Picture  Projector.  Use  of  Typewriter.  Call  Sheets. 
Preparation  of  Samples.  Routing  the  Export  Salesman. 
Examples  of  Good  and  Bad  Routing. 


xiv  CONTENTS 

CHAPTER  XIII 

Page 
Cooperation  with  the  Export  Salesman  in  the  Field  ....  131 
Advantascs  of  Correct  Supervision  of  Field  Work.  How  to 
Maintain  Contact  at  a  Distance.  Registration  of  Salesman's 
Cable  Addresses  Abroad.  How  to  Secure  Prompt  Delivery 
of  Mail.  Building  Prestige  for  the  Salesman.  Detecting  and 
Correcting  Weaknesses  of  Salesman  While  Overseas.  Use  of 
Cables  in  Cooperating  with  Field  Workers.  Letters  That  Inspire 
Salesmen  io  Best  Efforts.  Following  up  the  Work  of  the  Export 
Salesman.  European  and  American  Methods  Compared. 
Reviewing  the  Field  with  the  Export  Salesman  on  His  Return. 
Ten  Guide-posts  for  the  Export  Manager  in  Checking  Field  Work. 
Dangers  Inherent  in  Hard  and  Fast  Rules.  Rigid  Policy  in 
Production  Proved  Costly.  Example  of  Important  Customer 
Lost  by  Unwillingness  to  Modify  Package.  Emergency  Measures 
which  Have  Won  Latin-American  Merchants.  Profitable  By- 
products of  Meeting  Wishes  of  Importers  Abroad. 

CHAPTER  XIV 

The  Combination  Export  Salesman 140 

Two  Main  Types.  Use  of  Combination  Salesmen  Not  a  New  Idea. 
Assets  of  Combination  Travelers.  Why  they  Seek  to  Hold  Control 
of  Their  Customers.  The  Combination  Salesman  Resident 
Abroad.  How  He  Differs  from  Combinat  on  Traveler.  Example 
of  Territories  Covered  and  Methods  Employed.  Recent  Develop- 
ments in  Combination  Field.  How  to  Create  and  Control  Good 
Combination  Travelers.  Sub-letting  of  Salesmen  by  Manu- 
facturers. Method  of  Division  of  Salary  and  Expenses.  Effec- 
tiveness of  Modern  Combination  Salesman  Compared  to  One-line 
Traveler. 

CHAPTER  XV 

Developing  Export  Trade  by  Correspondence 147 

The  Place  of  the  Written  Word  in  Export  Selling.  Correspondence 
Establishes  the  Reputation  of  an  Enterprise.  Every  Letter  is  a 
Sales  Letter.  The  Construction  of  an  Export  Letter.  Mass 
Attack  by  Means  of  the  Sales  Letter.  The  Place  of  the  Enclosure 
in  Letter  Series.  Diagnosis  as  the  Predominant  Factor  in  Export 
Sales  Correspondence.     Letters  That  Build  up  Good  Will. 

CHAPTER  XVI 

How  Advertising  Gets  Foreign  Trade 163 

Superiority  of  American  Advertising  Methods  in  Domestic  Field. 
Need  of  Greater  Interest,  by  Americans,  in  Export  Avertising. 


CONTENTS  XV 

Page 
Exjunplcs  of  Poor  Advert isiiij;;  and  Unwise  Delegation  of  Adver- 
tising Authority.  Twcnity  Ways  to  Use  Exjjort  Advcu'tising. 
Need  of  Definite  Advertising  Plan  Behind  Every  Dollar  Invested. 
Costly  Errors  of  American  Export  Advertisers.  Advertising  Used 
to  Secure  Orders  through  Export  Commission  Houses.  How  an 
Export  Salesman  Secured  Needed  Appropriations  for  Local  Adver- 
tising Publicity  Method  Used  by  European  Maker.  Export 
Advertising  Not  a  Matter  of  Freakishness.  Fraudulent  Advertis- 
ing Schemes.     Common  Mistakes  in  Export  Advertising. 

CHAPTER  XVII 

Indirect  Exporting 178 

Channels  of  Indirect  Exporting.  Functions  of  the  Export  Mer- 
chant. What  is  an  Export  Commission  House?  The  Field  of  the 
Manufacturers'  Agent  Resident  Abroad.  The  Hybridization 
Process.  Overlapping  Activities.  Unjust  Accusations  Against 
Export  Commission  Houses  Refuted.  Early  History  of  American 
Exporting.  Distrust  Gradually  Vanishing.  Peculiar  Advantages 
of  Indirect  Exporting.  Why  Veteran  Manufacturing  Exporters 
Use  Export  Houses. 

CHAPTER  XVIII 

The  Export  Commission  House,  the  Importer  Abroad,  and  the 
American  Manufacturer  as  Co-partners  in  International 

Commercial  Exchange 184 

The  Function  of  the  Export  Commission  House.  What  the 
Importer  Abroad  Can  Expect  from  His  Purchasing  Agent.  Tear- 
ing Down  Barriers  That  Obstruct  Trade.  Mutual  Knowledge 
Essential.  The  Export  Commission  House  as  a  Builder  of  Ex{)ort 
Sales.  Examples  of  Proper  Cooperation.  The  Correct  Triangular 
Relation.  Ways  in  Which  the  Imjjorter  Abroad  Can  Help.  A 
Sound  Method  of  Handling  Substitutions.  Effect  of  War  on 
International  Trade.  Unsound  Interposition  of  Artificial  Obstacles. 
Placing  Responsibility  for  Error.  Model  Instructions  from 
Importers.  How  the  Export  Commission  House  Can  Render 
Greatest  Service. 

CHAPTER  XIX 

The  Export  Catalog  as  a  Salesman 204 

Function  of  the  Export  Catalog.  Comparison  of  the  Catalog  and 
the  Personal  Salesman.  Cover  Stock  and  Designs.  Losses 
through  Inadequate  Catalogs.  Catalog  Should  Make  it  Easy  to 
Buy.  The  Catalog  as  a  Correspondence  Time-saver.  Thorough- 
ness and  Balance  Typical  of  European  Export  Catalogs.     What  a 


xvi  CONTENTS 

Page 

Catalog  Should  Contain.  The  Use  of  Action  Photographs.  The 
Catalog  as  an  Educator.  As  a  Factor  in  Aiding  Salesman  in  the 
Field.  Translation  of  the  Export  Catalog.  Average  Domestic 
Catalog  Not  Translatable.     Rules  for  Checking  the  Export  Catalog. 

CHAPTER  XX 

The  Place  of  the  House  Organ  in  Export  Selling 217 

Function  of  the  House  Organ.  Fundamentals  of  Editorial  Policy. 
How  to  Secure  Reader  Interest.  Its  Use  in  Creating  Good-will. 
First  Steps  in  Preparation  of  Copy.  Mailing  Lists.  Articles  are 
Appreciated  by  Importers  Abroad.  Contributions  from  Outside 
the  Enterprise.  Features  Which  Insure  the  Preservation  of  Each 
Issue  by  the  Importer.  Photographic  Reproductions  of  Window 
Displays  as  Illustrations.  Method  of  Testing  Reader  Attention. 
Examples  of  Successful  and  Unsuccessful  Export  House  Magazines. 

CHAPTER  XXI 

The  Motion  Picture  in  Export 227 

Classification  of  the  Motion  Picture  as  a  Selling  Force.  Field  of 
the  Export  Motion  Picture  Inside  of  the  United  States.  Use  of 
Export  Films  by  Domestic  Commercial  Organizations.  Methods 
of  Use  of  the  Traveling  Film  Outside  the  United  States.  Use  of  the 
Portable  Motion  Picture  Projector  in  Exporting.  Branch  Office 
Equipment.  The  Export  Commission  House  and  the  Motion 
Picture.  Uses  Abroad  of  Portable  Projector.  Advantages  of  Use 
by  Agents.  How  the  Motion  Picture  Helps  the  Export  Salesman. 
Obstacles  in  the  Use  of  Motion  Pictures  Abroad.  Use  of  the 
Traveling  Film  in  Motion  Picture  Houses  Abroad.  Educational 
Use  of  the  Export  Motion  Picture.  Possibilities  in  Interesting 
Large  Consumers  by  Pictures. 

CHAPTER  XXII 

Samples  IN  Export  Selling 241 

Fundamentals  of  Sampling.  How  Samples  Can  be  Distributed. 
European  Use  of  Samples.  Example  of  Loss  through  Poor 
Packing  of  Samples.  Visualization  of  a  Salesman's  Samples  in  Use. 
Excellent  Sample  Displaj-s  Described  in  Detail.  The  Exclusive 
Agent  and  His  Samples.  Why  Samples  Increase  Sales.  Creating 
Consumer  Demand  by  Sampling.  Examples  of  Sound  Consumer 
Sampling.  How  to  Turn  Consumer  Inquiries  into  Dealer  Orders. 
The  Psychology  of  Sampling  Combined  wath  Advertising.  Speci- 
men Campaign  Based  upon  Coupon  Advertising.  Rules  Govern- 
ing Profitable  Distribution  of  Samples. 


CONTENTS  xvii 

CHAPTER  XXIII 

Page 

The  Testimonial  in  Export  Selling 258 

The  Important  Place  of  the  Testimonial  in  Overseas  Sales.  Eight 
Distinct  Uses  of  the  Testimonial  in  Introducing  Manufacturer  to 
Importers  Abroad.  References  but  Postponed  Testimonials. 
Testimonial  Letters.  Financial  Statements.  A  Novel  Use  of 
Testimonials  in  Connection  with  Fourteen  Features  in  Execution 
of  Orders.  Quality  of  Product  Proved  through  Words  of  Users. 
What  Constitutes  Quality?  Difficult  Selling  Points  Made  Effec- 
tive by  Use  of  Evidence  of  Others.  Use  of  Testimonial  by 
Automobile  Manufacturers.  Re-sale  Profit  Proved  by  Testimony 
of  Dealers.  Examples  of  Skilled  Uses  of  Testimonials  on  Non- 
tangibles. 

CHAPTER  XXIV 

Planning  Export  Sales  on  a  Basis  of  Ten-year  Development  .  .  270 
Estimate  of  Number  of  Manufacturing  Exporters  in  United  States 
and  Per  Cent  with  Adequate  Overseas  Representation.  Inade- 
quate Attention  Given  Exporting  Proved  Costly.  Exporting  is 
Selling  the  Whole  World.  Balanced  Export  Sales  Effort 
Portrayed.  Examples  of  Decade  Schedule  of  Export  Develop- 
ments. Charting  the  World  on  a  Ten-year  Basis.  The  Twenty- 
six  Territorial  Divisions  Used  as  a  Base  by  One  Manufacturer. 
Visualizing  Export  Conditions  and  Sales  by  Charts  and  Graphs. 
Balanced  World-wide  Sales  Cannot  Result  by  Chance. 

CHAPTER  XXV 

Planning  an  Export  Sales  Campaign 280 

Classification  of  Exporting  Manufacturers.  Well-balanced  Sales 
the  Ultimate  Goal  of  Export  Selling  Effort.  Selling  Methods  Used 
in  Export  Trade.  Examples  of  Methods  by  Which  Export  Orders 
are  Secured.  Types  of  Export  Sales  Campaigns.  Building  up  the 
Sales  Campaign.  Grand  Tactics  and  Strategics  of  Exporting. 
Laying  a  World-wide  Foundation  for  Export  Sales.  Examples  of 
Prestige  and  Good-will  Introductory  Campaigns.  Methods 
Employed  in  an  Intensive  Export  Sales  Campaign.  Capitalizing 
the  Intensive  Export  Sales  Campaign.  Executive  Supervision  of 
Intensive  Campaigns.     By-products  of  Export  Sales  Campaigns. 

CHAPTER  XXVI 

Typical  Export  Sales  Campaigns. 294 

Causes  of  Failure  in  Export  Selling.  Distribution  Must  Go  Hand 
in  Hand  with  Created  Demand.  Consideration  of  the  Campaign 
Plan  as  a  Whole.  Patented  Pencil  Campaign  in  Argentina. 
Example  of  Unsuccessful  Campaign  with  Paint  Removers.  Analj^- 
sis  of  Appeal  of  Product  an  Important  Factor.     How  Unsound 


xviii  CONTENTS 

Pace 
Competition  Can  be  Checked.  The  Four  Great  Elements  in  an 
Introductory.  A  Typically  Good  Campaign  Described  in  Detail. 
Three  Absolute  Essentials  in  Exporting.  Faulty  Export  Organiza- 
tion a  Barrier  to  Successful  Campaigns.  Changing  Losses  to 
Profits  by   Supplying   Missing   Ingredients   in  Export  Recipes. 

CHAPTER  XXVII 

How  TO  Construct  AN  Export  Sales  Campaign  FOR  A  Specialty.  .  308 
Typical  Specialty  Campaign  Abroad  Given  in  Detail.  Cost  and 
Results  Compared.  Year-by-year  Expense  and  Sales  Comparison 
Made.  How  to  Analyze,  Classify  and  Use  Selling  Points.  How 
Advertising,  Salesmen,  Correspondence  and  Samples  Can  Be 
Combined  in  a  Single  Campaign.  Cooperation  with  Resident 
Agent  Portrayed. 

CHAPTER  XXVIII 

The  Exclusive  Export  Agent 319 

Export  Agents  Classified.  Types  of  Export  Agents  Resident  in  the 
United  States.  Types  of  Agents  Resident  Abroad.  Major 
Divisions  of  Both  Analyzed  and  Defined.  Illustrations  of  the 
Nature  of  the  Relation  Between  American  Manufacturers  and 
the  Several  Classes  of  Agents.  Advantages  and  Disadvantages  of 
Agents  Who  Purchase  for  Re-sale.  The  American  Selling  Agency. 
The  Export  Company  as  an  Agent.  The  Export  House  as  an 
Agent.  Classification  of  Agents  Resident  Abroad.  The  Basis 
of     Exclusive     Representation.     Hybrid     Agencies     and     Their 


Advantages. 


CHAPTER  XXIX 


How,    When    and   Where  to  Select  and   Cooperate    with    an 

Exclusive  Agent  Resident  Abroad 329 

Unsound  Basis  for  Agency  Selection.  Common-sense  Methods  of 
Selection.  Essential  Qualifications  of  Exclusive  Export  Agent. 
Importance  of  Credit  Man  in  Agency  Granting.  O.  T.  Erickson's 
Explanation  of  Credit  Man's  Function  in  Agency  Selection. 
Modern  Tendencies  in  Types  Approved.  Advantages  of  Manu- 
facturers' Representative  Resident  Abroad.  Selling  Companies 
as  Agents.  Examples  of  Methods  Used  by  Leading  Exporting 
Manufacturers  in  Securing  Agents.  Value  of  Supplementary 
Evidence.  Agents'  Commissions  Reduce  Profits.  Costliness  of 
Establishing  Unsatisfactory  Agencies.  Fundamentals  of  Agency 
Granting.  Cooperation  with  the  Exclusive  Export  Agent.  Far 
Eastern  Agent's  Examples  of  Good  and  Poor  Coordination  of 
Effort.     How  to  Increase  Sales  through  Agents. 


CONTENTS  XIX 

CIIAPTER  XXX 

The  Export  Exclusive  Aoenoy  Contuact 343 

Function  of  Agency  Contract.  Importance  of  Exact  Definitions 
in  Foreign  Trade.  Contracts  Must  be  Equitable.  Examples  of 
Wordings.  Agency  Contract  as  a  Sales  Document.  Fifty 
Factors  to  be  Considered  in  an  Agency  Contract. 

CHAPTER  XXXI 

Should  the  Export  Manager  Pass  on  Foreign  Credits 34S 

The  Export  Manager's  Knowledge  of  Actual  and  Prospective  Cus- 
tomers. His  Ability  to  Become  a  Grantor  of  Foreign  Credits.  His 
Direct  Interest  in  Net  Profits.  Possible  Economy  in  Export 
Manager's  Control  of  Credit  Function.  Examples  Proving 
Assumption  of  Credit  Duties  Rob  Export  Manager  of  Time  Needed 
for  Organizing  and  Selling.  Capitalizing  the  Greater  Experience 
of  the  Credit  Manager.  Wisdom  of  Divorcing  Credit  and  Sales 
Functions. 

CHAPTER  XXXII 

The  Fundamentals  of  Foreign  Credits 355 

Why  Should  Credit  be  Extended  Abroad?  Illustration  of  the 
Nature  of  Foreign  Credits.  The  Function  of  Foreign  Credits. 
How  Credits  Increase  Sales.  The  Time  Element  in  Credits.  The 
Relation  of  Turn-over  to  Extension  of  Time.  How  Per  Cent  of 
Profit  Affects  the  Granting  of  Credits.  Examples  of  Credit  Grant- 
ting.  Reasons  for  Taking  Cash  Discounts.  The  Individual  is 
the  Dominant  Factor  in  Foreign  Credit  Granting.  Credit  is 
Personal  and  Not  National.  The  Three  C's  of  Credit.  Credit 
Investigations  before  Solicitation  of  Orders.  Sales  Use  of  Credit 
Data. 

CHAPTER  XXXIII 

The  Foreign  Credit  Man  as  a  Merchandiser 367 

The  New  Conception  of  the  Foreign  Credit  Man's  Sphere  of  Action. 
Example  of  Unusual  Financing.  The  Sales  Angle  in  the  Need  of 
Representation  Factor  of  Credits.  How  a  Credit  Manager 
Developed  an  Agent's  Ability  to  Buy  Largely.  The  Credit  Man  as 
a  Sales  Prophet.  Cooperation  between  Export,  Sales  and  Credit 
Departments. 

CHAPTER  XXXIV 

Sources  of  Information  on  Foreign  Credit  Risks 371 

Mercantile  Agencies  Used  in  Domestic  Credits  Have  Foreign  Trade 


XX  CONTENTS 

Page 

Departments.  Nature  of  Reports  Supplied  by  Mercantile 
Agencies.  Credit  Bureaus  of  National  Association  of  Manu- 
facturers and  Philadelphia  Commercial  Museum.  Credit 
Service  Possible  to  Members  of  Export  Organizations.  The 
American  Manufacturers'  Export  Association.  Boston  Export 
Round  Table.  Reports  Supplied  by  Export  Journals.  Service 
Bureaus  of  American  Banks.  Credit  Agencies  Abroad.  Credit 
Data  Secured  by  Export  Salesman  and  Agents.  Value  of  Refer- 
ences. Workings  of  Foreign  Credit  Interchange  Bureau  of 
National  Association  of  Credit  Men.  Details  of  Its  Operation. 
Exposition  of  Its  Advantages.  Credit  Data  Obtainable  from 
Trade  Organizations  and  Private  Sources. 

CHAPTER  XXXV 

Elements  of  Foreign  Collections 377 

Principles  Underlying  Sound  Foreign  Collections.  The  Collection 
Process  Should  be  Educational.  Many  Delayed  Collections 
Due  to  American  Ignorance  of  Mutual  Advantages  of  Time  Docu- 
mentary Draft  Procedure.  Foreign  Collection  Letters  Should  be 
Sales  Letters.  The  Three  Purposes  of  a  Collection  Letter.  Use  of 
Clean  Drafts  in  Collections.  Problems  Inherent  in  Collections 
Based  upon  Failure  to  Pay  Documentary  Drafts  at  Maturity. 
Reason  for  Non-payment  Tremendously  Important.  Examples 
of  Collections  in  Connection  with  Documentary  Drafts.  Collec- 
tion Arguments  That  Appeal  to  Foreign  Buj'ers.  Specimen 
Collection  Letters. 

CHAPTER  XXXVI 

Fraudulent  Export  Schemes 384 

Examples  of  Fraudulent  Export  Endeavor.  The  Black  Band. 
The  False  Reference  Plan.  Overseas  Export  Criminal  Schemes. 
Necessity  for  Investigation  of  Local  Export  Advertising  Offers. 
Fraudulent  Export  Directories.  The  Egyptian  Sight  Draft  Fraud. 
The  Defense  against  Siinilar  Schemes.  Dangers  in  Selling  at  Low 
Export  Prices  Without  Control  of  Shipments.  The  Pernambuco 
Triangle.  The  Pirate  Ship.  A  Judicial  Attitude  and  Common 
Sense  Will  Protect  Adequately  against  the  Export  Fakir. 

Index 399 


EXPORT  MERCHANDISING 

CHAPTER  I 
COMMON  SENSE  IN  EXPORT  TRADE 

"Exporting  is  not  in  itself  a  science  or  an  art.  It  is  simply  a  part 
of  merchandising.  The  better  the  understanding  of  the  principle 
of  business  itself — which  knows  no  clime,  creed  or  color  of  skin — the 
better  the  exporter." — Thomas  W.  Pelham. 

The  Justification  of  Exporting  Is  Profit.  Export  Trade  Is  Merely  Selling 
Goods  in  Markets  New  to  the  Merchandiser.  Exporting  Is  no  Longer  "the 
Great  Business  Adventure."  Organization  and  Selling  Are  the  Common- 
sense  Problems  of  Foreign  Trade.  No  Mystic  Recipe  Needed  to  Enjoy  Foreign 
Profits.     Export  Trade  Is  Based  on  Common  Sense. 

Profit  is  the  justification  of  export  trade;  honest  profit — net 
profit  over  a  long  term  of  years  coming  from  honest  goods 
honestly  sold. 

It  is  true  that  it  is  a  patriotic  duty  to  export.  It  is  true  that 
export  trade  protects  and  insures  not  only  those  engaged  in  it, 
but  also  their  fellow  citizens.  It  is  true  that  the  by-products  of 
exporting  are  many  and  valuable.  But  in  the  eyes  of  the  execu- 
tive, the  essential  factor  is  direct  profit.  Export  trade  is  a  direct 
road  to  profits  all  but  limitless  in  volume  and  duration. 

Boundary  Lines  Not  Barriers. — Export  trade  is  merely  selling 
goods  in  markets  new  to  the  merchandiser.  Fundamentally, 
there  is  no  difference  between  adding  new  accounts  in  Canton, 
China,  and  in  Canton,  Massachusetts.  The  surface  detail  of 
pronunciation  differs,  but  the  market  is  essentially  the  same. 
The  boundary  line  on  the  map  is  not  the  barrier  to  increased 
profits.  It  is  the  boundary  line  in  the  mind  of  the  business 
executive  that  is  hard  to  cross. 

Profits  are  not  a  mere  matter  of  costs  of  manufacture,  list 
prices  and  discounts.  Sales  volume,  initial  sales  expense  and 
cost  of  maintaining  business  once  secured  are  far  more  important 
elements.  Paper  profits  are  too  dangerous  a  yard-stick  to  be 
regarded  as  more  than  a  pleasing  vision.  They  need  to  be 
substantiated  by  cold  practice. 

1 


2  EXPORT  MERCHANDISING 

l*i()(i(s  from  cxportinp;  arc  not  paper  profits.  It  rcHpiircs  only 
olcmontary  accounting  to  chock  profits  from  foreign  sales. 

Exporting  is  Merchandising. — ^Therc  is  often  ample  justifica- 
tion for  pio])l<Mnatical  expenditures  in  introductory  sales  cam- 
paigns here  at  home.  In  export  trade,  particularly  in  the  early 
years  of  any  single  firm's  experience,  there  is  usually  such  an 
obvious  course  to  be  pursued  that  it  is  a  matter  of  investment 
rather  than  speculation.  There  is  seldom  need  today  for  the 
new  exporter  to  seek  out  markets  whose  possibilities  are  not 
already  known.  The  differentiation  is  that  of  travel  compared 
with  exploration. 

Exporting  is  no  longer  "the  great  business  adventure."  It 
is  prosaic  merchandising,  not  romance.  Harbors  have  been 
discovered — reefs  have  been  charted — surface  details  different 
from  the  ordinary  have  been  recorded.  There  is  a  wealth  of 
information  on  every  market,  large  and  small.  The  day  of  the 
sailing  ship  laden  with  beads  and  rum,  seeking  strange  lands 
rich  in  ivory  and  images,  has  passed.  Export  trade  today  is 
conducted  in  terms  of  card  indices  and  statistical  bureaus. 

The  duty  on  pink  pajamas  into  Patagonia  is  as  carefully 
recorded  as  the  wind  velocity  in  New  York  City  at  11:00  a.m. 
on  March  6,  1913 — and  equally  accessible.  Individuals,  asso- 
ciations and  the  Government  have  for  years  been  gathering  and 
sifting,  checking  and  analyzing  information  on  foreign  markets. 
The  problems  of  foreign  trade  are  common  sense  problems  of 
organization  and  selling. 

Present  Day  Overseas  Conditions. — These  facts  are  too  seldom 
understood.  The  non-exporter  often  wrongly  feels  that  he 
must  set  sail  on  uncharted  seas  and  must  divorce  himself  of 
friends  and  landmarks.  Instead  of  a  condition  true  many 
decades  ago,  he  will  find  himself  on  avenues  of  transportation 
long  since  standardized,  his  competitors  often  present  and  his 
companions  not  alone  Steel,  Harvester  and  Oil,  but  also  Gillette 
Razors,  Regal  Shoes,  and  Royal  Baking  Powder.  Very  possibly  he 
will  find  to  his  surprise  that  "the  little  shack  of  a  factory  'round 
the  corner"  is  his  predecessor  in  foreign  fields  and  better  known 
in  Bombay  than  in  Boston. 

There  is  no  mystic  recipe  which  is  needed  in  order  to  enjoy 
foreign  profits.  Success  in  foreign  trade  is  not  necessarily 
preceded  by  governmental  subsidy,  monopoly  or  vast  capitaliza- 
tion.    The  product  itself  may  range  from  a  queen  bee  to  a 


COMMON  SENSE  EXPORTING  3 

suspension  liridge  or  a  battleship.  Fortunes  at  home  or  abroad 
have  been  made  from  toys  and  from  locomotives.  Cap  pistols 
and  candies — lockets  and  lumber — saucers  and  sausages — from 
A  for  Australasia  to  Z  for  Zanzibar  there  is  an  existing  market  for 
products  and  ideas,  service  and  I'cligions. 

Domestic  Sales  Conditions  Not  Standardized. — ^Strange  con- 
ditions are  not  confined  to  foreign  lands.  Brown  eggs  in  Boston 
bring  three  cents  more  per  dozen  than  white  eggs.  White  eggs  in 
New  York  bring  three  cents  more  per  dozen  than  browne  ggs.  The 
drug  store  of  the  Middle  West  is  no  more  the  drug  store  of  New 
York's  East  Side  than  the  Copley  Plaza  is  the  Salvation  Army 
barracks..  Our  several  states  differ  even  more  radically  in 
taxation  statutes  than  Peru  and  the  Fiji  Islands  differ  in  port  of 
entry  procedure. 

Invoices  for  railroad  and  governmental  contracts  are  often 
more  complicated  than  an  export  invoice  showing  case  numbers 
and  weights  and  measurement  with  metric  equivalents.  There 
is  a  large  manufacturer  in  New  Jersey  who  for  years  has  made  no 
serious  effort  to  secure  a  share  of  the  next-door  New  York 
market.  He  has  found  it  more  profitable  to  develop  his  foreign 
sales. 

There  are  too  many  misconceptions  of  foreign  trade  even  to 
list.  Fortunately,  each  and  every  one  is  easily  dispelled  by 
investigation.  "Foreigners  are  crooks" — but  in  no  greater 
percentage  than  Americans;  "foreigners  want  only  cheap  goods" 
— an  amazing  misconception.  They  want  the  highest-priced 
typewriters,  sewing  machines,  cash  registers,  safety  razors — 
wanted  and  received  coat-front  shirts  before  they  were  known  in 
Brookline  or  Denver. 

THE  COMMON  SENSE  ATTITUDE  IN  EXPORTING 

Export  trade  is  based  on  common  sense.  It  is  the  presenting 
of  an  article  to  the  attention  of  a  prospective  purchaser,  the 
exchange  of  value  for  value  and  the  creation  of  personal  relations 
between  co-partners — maker  and  merchant. 

The  (lueries  arising  in  connection  with  foreign  trade  all  have 
common  sense  answers.  "Why  is  foreign  business  conducted  on 
a  documentary  time  draft  basis?"  Because  common  sense  tells 
us  that  in  extending  credit  it  is  well  to  define  clearly  the  maturity 
date;  because  the  foreign  documentary  draft  is  decidedly  better 


4  EXPORT  MERCHANDISING 

even  than  our  "trade  acceptance;"   Ijccaiise  foreign  trade   in 
many  ways  is  far  more  business-like  than  our  domestic  trade. 

A  First  Question. — "How  can  I  select  a  good  export  sales 
manager?"  C'onunon  sense  tells  us  that  it  is  easier  for  an 
executive  familiar  with  sales,  to  select  any  variety  of  sales 
manager  than  to  select  a  competent  chemist.  It  has  been  said 
that  two  questions  and  their  answers  will  test  an  applicant  for 
an  export  managership: 

1.  Can  you  sell  goods? 

2.  Who  says  so? 

Common  sense  tells  us  that  an  export  sales  manager  should 
be  a  sales  executive  rather  than  a  linguist,  and  a  builder  of  sales 
campaigns  rather  than  an  encyclopedia. 

"Can  credits  be  safely  extended  abroad?"  Common  sense 
tells  us  to  seek  the  authorities.  Investigation  through  credit 
associations  and  governmental  departments  proves  that  there 
are  facilities  for  securing  adequate  credit  information.  Letters 
to  long-established  exporters  bring  back  the  truth  that  credit 
losses  on  foreign  sales  average  less  than  on  a  similar  volume  of 
domestic  sales. 

The  Cost  of  First  Steps. — "Is  it  necessary  to  spend  thousands 
in  preparation  for  export  sales?"  Common  sense  tells  us  that 
we  have  a  choice  of  methods  in  any  attempt  to  secure  new 
customers.  If  we  desire  many  new  customers  rapidly,  common 
sense  and  its  twin — experience — tell  us  that  it  will  require 
greater  expenditures  and  investment  than  if  we  are  willing  to 
proceed  slowly. 

When  Should  Salesmen  Be  Sent  Abroad? — "Must  we  send 
our  own  exclusive  salesmen  abroad  in  order  to  secure  foreign 
orders?"  Common  sense  tells  us  that  domestic  experience 
must  be  consulted.  Some  highly  technical  lines  demand  export 
salesmen  from  the  start.  Other  lines — novelties,  for  example — 
can  frequently  be  sold  by  mail  alone.  In  the  majority  of  lines, 
common  sense  tells  us  that  sooner  or  later  the  personal  touch  of 
the  salesmen  will  prove  necessary  to  the  fullest  sales  develop- 
ment in  some  of  the  many  worthwhile  markets. 

"Must  we  translate  our  own  letters  and  our  price  lists  into 
foreign  languages?"  Common  sense  tells  us  not  to  put  the 
artificial  obstacle  of  language  between  buyer  and  seller.  The 
cost  of  translation  service  is  small  in  comparison  to  the  size 
of  the  barrier  it  removes.     There  exist  competent  translation 


COMMON  SENSE  EXPORTING  5 

bureaus  in  connection  with,  as  well  as  independent  of,  the  organi- 
zations devoted  to  foreign  trade. 

Accurate  Records  of  Regulations  Exist. — "How  can  we  avoid 
costly  errors  arising  from  failure  to  comply  with  regulations  in 
foreign  countries?" 

Common  sense  tells  us  that  these  regulations  must  be  a  matter 
of  record.  Common  sense  tells  us  that  if  we  inquire  of  those 
actively  engaged  in  foreign  commerce  we  can  locate  reliable 
sources  of  information.  Common  sense  tells  us  that  what  others 
are  doing  correctly  day  in  and  day  out  cannot  be  a  matter  of 
guesswork.  There  is  no  problem  of  foreign  trade  which  common 
sense  cannot  answer  immediately  or  after  consultation  with 
recognized  authorities. 

The  common  sense  attitude  is  a  necessity.  Unless  exporting 
can  be  reduced  to  an  understandable  basis  and  brains  trained  in 
solving  domestic  problems  used  in  securing,  holding  and  increas- 
ing overseas  customers,  then  it  is  indeed  a  doubtful  adventure. 

Importance  of  Correct  Organization. — The  common  sense 
attitude  must  extend  from  mailing  clerk  to  president.  If  the 
clerk  is  panic-stricken  when  faced  with  the  necessity  of  correctly 
stamping  a  letter  addressed  to  Madagascar  he  will  make  unneces- 
sary mistakes — and  irritate  possible  customers.  If  the  presi- 
dent secretly  loses  confidence  in  his  judgment  when  faced  with 
a  question  of  foreign  trade  policy,  then  his  decision,  based  on 
fear  of  the  unknown,  may  handicap  his  house  for  decades. 

It  is  entirely  proper  for  the  highest  executives  to  place  the 
burden  of  initiative  and  responsibility  on  a  selected  member  of 
their  force.  But  they  owe  it  to  the  man  they  select,  to  them- 
selves and  to  the  business  itself  to  be  ready  always  to  cooperate 
intelligently,  without  fear  and  from  a  common  sense  viewpoint. 

The  common  sense  attitude  of  seasoned  executives  is  most 
valuable  in  solving  to  best  advantage  the  problems  which  arise 
frequently  in  opening  new  markets.  Several  years  ago  a  Boston 
manufacturer  was  faced  with  the  necessity  of  prompt  action  on 
an  exclusive  agency  problem  which  had  angles  leading  into 
several  Central  and  South  American  countries.  By  divorcing 
from  the  problem  all  but  the  essential  factors  it  became  not  a 
foreign  problem  but  a  business  problem.  As  such,  a  higher 
executive  than  the  export  manager  solved  it  at  a  glance.  He 
saw  a  way  far  better  than  was  within  the  limitations  of  the 
export  manager's  shorter  business  experience. 


6  EXrORT  MERCHANDISING 

Common  sense  told  the  export  man  that  the  situation  which 
he  faced  deserved  the  attention  of  the  highest  executives  of  his 
corporation.  Common  sense  told  him  to  ehminate  all  distracting 
details.  Common  sense  enabled  the  higher  executive  to  use  his 
domestic  experience  to  determine  the  one  right  course  of  action. 

Looking  into  the  Future. — The  common  sense  attitude  above 
all  else  sees  that  there  is  a  tomorrow  after  every  today.  It 
reahzes  that  there  is  only  lack  of  sense  in  seeking  to  secure 
foreign  customers  today  and  then  abandon  them  tomorrow. 

Every  step  in  exporting  must  be  a  forward  step.  The  common 
sense  attitude  enables  each  step  to  be  made  in  safety  and  to  be  a 
direct  advance  toward  the  goal  of  world-wide  distribution. 

"Foreign  trade  is  not  so  new  and  not  so  untried  but  that  the 
exporter  can  find  plenty  of  records  of  other  men's  failures  and  other 
men's  successes  by  which  to  guide  his  own  efforts." — W.  H.  Lough. 

COMMON  SENSE  IN  SELLING  METHODS 

Visions  of  caravans,  races  strange  in  costumes  and  customs, 
long  winding  rivers  and  mountain  chains  which  divide  a  conti- 
nent have  many  times  blinded  sane  business  men  to  common 
sense  tactics  in  selling  merchandise  abroad.  Surely  the  trade 
of  such  unusual  countries  must  be  sought  by  methods  equally 
unusual,  is  the  thought  which  has  been  responsible  for  many 
follies  in  export  endeavor. 

The  city  dweller  in  the  United  States  must  keep  before  him 
always  the  truth  that  here  at  home  there  are  unusual  methods 
of  transportation.  We,  too,  have  aborigines,  long  winding 
rivers  and  even  the  Rockies  which  are,  after  all,  only  the  Andes 
called  by  another  name.  Here  at  home  our  biscuits  are  eaten 
(and  given  preference  over  the  wheat  cakes  of  tradition)  by 
races  fantastic  enough  in  customs  and  costumes.  Yet  here  at 
home  we  put  the  "foreign  language  dailies"  to  the  acid  test  of 
advertising  value.     We  should  abroad. 

Unbalanced  Plans  Are  Dangerous. — Here  at  home  come  to  us 
visionaries  who  wish  us  to  emblazon  our  brands  on  captive  bal- 
loons and  on  mirrors.  We  reject  these  schemes  because  of  their 
lack  of  suitability  to  our  plans  as  a  whole.  We  should  abroad. 
Letters  come  to  us  from  the  smaller  towns  of  Texas  and  Oregon 
seeking  the  agency  for  our  products.  These  requests  we  grant 
07ily  when  their  granting  increases  the  effectiveness  of  our  major 
sales  plan.     We  should  do  likewise  in  our  foreign  trade. 


l''i(;.  1.  W'allham  wati-lu's  nvvv  Japan.  Tlu'  Imperial  (lovernment  pro- 
claimed June  21,  1921  as  Time  Propaganda  Day  to  impress  upon  the  Japanese 
the  value  of  time.  The  Tokyo  Manager  of  the  Waltham  Watch  Company  can 
be  seen  under  the  sign  which  literally  translated  reads  "Set  up  your  watches 
accurate  by  the  Waltham  Chronometer,  standard  time  of  today.'  '  The  booth 
was  set  up  on  the  Ginza — the  Broadway  of  Tokyo. 


Fig.  2. — An  overseas  paradox.  Standing  still,  marking  time  and  running. 
This  Ingersoll  novelty  was  photographed  in  the  park  system  of  Buenos  Aires 
after  it  had  been  barred  from  the  streets  for  drawing  traffic  obstructing  crowds. 


COMMON  SENSE  EXI'ORTING  7 

We  see  huge  businesses  built  up  by  a  gigantic  catalog — and 
no  salesmen.  Yet  here  at  home  we  recognize  that  our  products 
require  a  different  method  of  merchandising.  This  condition 
does  not  change  with  the  crossing  of  an  imaginary  line  on  the 
world's  surface. 

Soundness  the  First  Essential. — Always  the  fundamental 
must  be  sought  before  we  adopt  a  method  for  overseas  sales 
expansion.  If  the  method  advocated  is  not  one  which  would  be 
employed  in  the  domestic  market,  common  sense  will  insist  that 
its  advocate  prove  that  the  exception  is  wise  and  necessary  in 
foreign  fields. 

There  are  many  valid  reasons  for  modification  of  methods  in 
order  to  meet  conditions  which  vary  from  the  normal.  The 
good  salesman  knows  that  one  prospective  customer  can  never 
be  sold  by  direct  attack,  and  yet  his  next  door  neighbor  insists 
on  a  face-to-face  duel  over  every  order.  The  good  advertising 
man  realizes  that  his  argument  must  meet  the  requirements  of 
his  audience. 

A  certain  soap,  for  example,  is  sold  in  many  sections  of  the 
United  States  because  it  is  at  its  best  with  hard  waters.  It  bases 
its  sales  argument  in  these  sections  squarely  on  this  merit.  In 
other  parts  of  this  country  it  never  mentions  this  feature, 
because  the  opportunity  for  its  successful  exploitation  is  absent. 
Instead,  it  emphasizes  its  convenient  shape,  its  economy  and  its 
many  uses. 

The  Basis  for  Success. — Similarly,  common  sense  has  insis- 
ted that  distribution  for  many  makers  is  not  a  matter  of 
nation-wide  catering  to  either  jobber  or  retailer,  but  concessions 
depending  on  the  character  of  the  towns  and  cities  even  within  a 
state.  There  exist,  in  a  highly  developed  form,  methods  of 
distribution  in  some  foreign  markets  for  which  we  have  no 
domestic  counterparts.  Common  sense  urges  the  study  of  these 
new  sales  weapons.  It  reminds  forcibly  that  the  good  merchan- 
diser is  the  one  who  knows  every  means  of  attack  and  their  uses, 
the  one  or  ones  Ijcst  suited  to  his  product  and  needs. 

There  is  a  common  sense  way  to  value  each  and  every  method 
of  selling  goods.  Often  it  is  consultation  with  men  who  have 
experimented  and  for  reason  accepted  or  rejected.  Study  of  the 
successful  exporter  often  leads  straight  to  11h>  ;i(l()i)tion  of  the 
methods  responsible  for  his  success.  Analysis  of  the  ways  and 
means  of  a  merchandising  triumph  abroad  often  brings  to  light 


8  EXPORT  MERCHANDISING 

elements  unsuspected  or  values  enhanced  by  combinations.  It 
is  better  to  act  on  an  ounce  of  proved  fact  than  on  a  ton  of  free 
advice  behind  which  there  can  be  found  no  proofs. 

The  Common  Sense  Searchlight. — Centuries  have  added 
nothing  to  the  four  methods  of  selling.  The  salesman,  the  letter, 
the  advertisement  and  the  sample  or  testimonial  remain  our 
only  choices.  When  we  are  asked  to  adopt  combinations  of  these 
four,  or  modifications,  we  can  turn  back  the  pages  of  mercantile 
history  and  on  the  past  gauge  the  future. 

When  offered  a  chance  to  participate  in  selling  goods  by  stere- 
opticon  slides  displayed  on  the  Amazon;  to  sell  goods  at  less  than 
cost  "in  order  to  secure  a  foothold;"  or  to  visit  the  Esquimaux 
in  order  "to  gain  much  from  first-hand  observation  of  their 
quaint  habits,"  always  test  the  suggestion  by  a  common  sense 
analysis  of  the  saneness  of  the  method. 

Make  this  statement  to  those  who  seek  your  cooperation  in 
such  methods: 

"The  plan  would  not  appeal  to  me  as  sound  here  at  home." 

Ask  this  question: 

"What  common  sense  reasons  are  there  to  prove  that  I  should 
vary  my  domestic  practice  in  the  markets  you  desire  me  to 
exploit?" 

Apphed  common  sense  in  selecting  export  methods  is  a  long 
step  away  from  regrets. 


CHAPTER  II 
EXPORT  TRADE  AS  INSURANCE 

"We  seek  foreign  trade  because  we  know  that  its  attainment   .    .    . 
is  vital  to  all    within  the  nation's  borders." — C.  K.  Mcintosh. 

Export  Trade  Is  the  Only  National  Insurance.  Overseas  Sales  Provide 
Safety  Factor  Against  Periods  of  Domestic  Depression,  hi  Panic  Years  at 
Home  the  Exporting  Manufacturer  Reaps  Greatest  Reward.  Exporting 
Protects  the  Individual  Enterprise,  the  Commuriity  and  the  Nation.  Adva7i- 
tages  Which  Accrue  to  Exporters  in  Their  Domestic  Fields. 

World-wide  distribution  is  the  sole  insurance  of  real  value 
against  times  of  domestic  financial  depression.  It  is  practical 
business  insurance  to  divide  the  risks  of  credit  and  depression 
over  the  widest  possible  territory.  Sane  selection  of  foreign 
customers  is  based  not  on  placing  all  foreign  eggs  in  the  basket 
of  a  single  foreign  market,  but  on  distributing  these  in  such  cities 
as  Yokohama,  Shanghai,  Hong  Kong,  Sydney,  Melbourne, 
Bangkok,  Bombay,  Cape  Town,  Rio  de  Janeiro,  Buenos  Aires, 
Valparaiso,  Lima,  the  capitals  of  Europe,  such  wonderful  cities 
as  Constantinople,  Cairo  and  hosts  of  smaller  but  buying  centers. 

ESTABLISHING  A  FACTOR  OF  SAFETY 

When  a  manufacturer  has  built  up  a  clientele  in  foreign  coun- 
tries whose  purchases  form  even  a  modest  fraction  of  his  total 
output  his  factor  of  safety  is  decidedly  greater  than  that  of  his 
non-exporting  competitor.  Following  the  customary  practice  of 
defining  payment  dates  by  drafts,  he  is  sure  of  a  sufficient  volume 
of  payments  at  anticipated  times  to  tide  over  any  temporary 
stringency  in  the  domestic  money  market;  whereas,  the  very 
cause  of  the  calling  in  of  loans  which  makes  it  desirable  for  the 
non-exporter  to  make  prompt  collections  will  cause  such  cus- 
tomers to  seek  extensions.  This  factor  of  safety  increases  out  of 
proportion  as  the  percentage  of  exports  is  increased  because, 
particularly  on  lines  bearing  a  high  profit,  the  manufacturer  is 
able  to  meet  his  entire  obligations  at  maturity  from  his  proceeds 
on  foreign  orders  and  could  even  close  down  his  factories  fo    )  a 

9 


10  EXPORT  MERCHANDISING 

period    of   several   months   and    make   no   attempt   to   enforce 
domestic  ])aymeTits  due. 

When  Panics  Come. — In  fact,  it  is  in  a  i)anic  year  that  the 
direct  exporting  manufacturer  reaps  the  greatest  domestic 
advantages.  While  his  competitors  are  forced  to  conserve  their 
resources  he  can  conduct  sales  campaigns  in  every  city  they  are 
forced  to  neglect.  Where  the  non-exporter  must  offend  slow- 
paying  customers  with  imperative  demands  for  settlement  he, 
enjoying  a  steady  influx  of  payments  representing  cost  plus 
profit,  is  in  a  position  not  only  to  extend  longer  terms  and  to  be 
lenient  in  collections,  but  also  to  solicit  the  patronage  of  the 
slow-paying  but  responsible  buyers  offended  by  competitors' 
collection  methods. 

PROTECTING  THE  CUSTOMER  AND  THE  INDUSTRY 

Not  only  is  such  a  manufacturer's  position  of  value  to  himself 
but  it  is  a  decided  benefit  to  his  customers  and  his  competitors' 
customers.  For  it  enables  the  dealers,  constituting  "the  trade" 
as  applied  to  his  line,  to  conduct  business  under  normal  business 
conditions  and  meet  more  pressing  obligations  from  their  natural 
resources  without  forcing  unfavorable  loans  or  having  their 
credit  strained  beyond  its  possibilities.  Multiply  the  single 
exporting  manufacturer  by  all  his  mates  in  all  lines,  and  a  verita- 
ble sea  wall  is  erected  against  the  storm  of  financial  stringency. 
Can  there  be  a  greater  panacea  for  a  panic  caused  by  lack  of 
money  at  home  than  a  steady  stream  pouring  in  from  abroad? 

Preventing  Domestic  Depression. — There  is  only  harm  in 
sales  at  bargain  prices  abroad  when  the  domestic  market  is 
glutted,  or  in  the  dumping  of  obsolete  and  below-standard 
products  on  which  no  future  is  expected  or  possible;  but  in  the 
carefully  developed  world-wide  markets  made  possible  by  the 
superior  quality  of  American-made  goods  backed  up  by  intelli- 
gent cooperation  with  foreign  dealers  and  good  service,  even  in 
the  height  of  domestic  seasons,  there  is  the  one  sure  preventive 
of  depressed  financial  conditions  at  home. 

The  Best  Insurance. — There  is  no  doubt  that  the  business 
world  within  our  boundaries  is  considering  export  trade  in  the 
light  of  insurance  more  seriously  than  ever  in  our  history.  No 
longer  is  it  regarded  as  a  mystic  way  of  earning  dividends  open 
only  to  a  few  who  in  some  magical  manner  have  inherited  an 
open  sesame.     It  is  no  longer  considered  as  only  a  minor  side-line 


EXPORT  TRADE  AS  INSURANCE  11 

to  1)0  used  and  abused  as  a  toy.  The  enthusiasm  created  l)y  the 
building  of  the  Panama  Canal  and  "discovery"  of  South  America 
has  been  tempered  by  the  War  and  a  sudden  realization  that 
the  world,  after  all,  contains  other  continents. 

The  question  of  today  in  the  business  world  is  "Can  we  regard 
foreign  trade  as  permanent  insurance  of  our  commercial  life?" 
This  is  just  the  type  of  sane  question  which  in  itself  shows 
remarkable  progress  in  so  short  a  time  as  the  last  decade.  The 
robe  of  mystery  has  been  torn  from  exporting;  the  day  of  "blue 
sky  and  bunkum"  is  slowly  passing.  At  last,  every  manufac- 
turer of  progressive  inclination  is  regarding  the  acquisition  of 
foreign  business  from  a  common  sense  standpoint. 

When  to  Insure. — There  is  obviously  no  sound  reason  for 
preparing  for  insurance  through  an  export  future  which,  like  a 
mirage,  will  always  be  beyond  reach.  Unless  present  effort  will 
result  in  permanent  profit,  our  businesses  had  best  confine  their 
efforts  to  improvement  of  product  and  distribution  in  the  home 
market,  which  still  offers  wonderful  possibilities  for  expansion 
for  the  great  majority  of  products.  Unless  the  work  of  today 
will  be  but  the  cornerstone  of  the  monument  of  tomorrow  in 
foreign  fields,  the  idea  had  best  be  relegated  to  the  graveyard  of 
other  alluring  but  impracticable  ideas. 

It  should  be  known  as  an  axiom  that  the  nation  whose  manu- 
facturers' products  are  sold  in  every  corner  of  the  world  is 
panic-proof  as  against  internal  conditions.  The  best  insurance 
against  a  national  panic  is  a  healthy  export  trade. 


CHAPTER  III 
EXPORT  POLICIES— THEIR  WHYS  AND  WHEREFORES 

"Policies,  or  the  system  of  procedure  adopted  as  the  best,  are 
calculated  to  further  the  best  interests  of  the  individual  or  the 
nation." — Charles  Morris. 

Why  Export  Policies  Are  Indispensable.  Policies  Must  Be  Established 
to  Protect  Rights.  Efficiency  Demands  Establishment  of  Policies.  Success 
in  Foreign  Trade  Depends  upon  Establishment  of  Sound  Policies.  Policy 
of  Executive  Control.  Methods  of  Executive  Control.  Manufacturing 
Policy.  What  Products  Shall  Be  Exported.  Price  Policy.  How  to  Price 
Merchandise  for  Export.  Sales  Policy.  Credit  Policy  Essential.  Impor- 
tant Points  to  be  Considered  in  the  Administration  of  Advertising  Policy. 

Export  policies  are  indispensable  primarily  because  they  are 
essential  to  the  just  administration  of  overseas  trade.  In 
justice  to  the  business  itself  there  must  be  policies  to  prevent 
discrimination  against  domestic  trade  and  those  whose  interests 
lie  wholly  or  largely  within  the  realms  of  domestic  trade.  The 
business  as  a  whole  must  be  insured  against  both  unwise  diver- 
sion of  capital  to  foreign  sales,  endeavors  and  loss  of  capital  in 
export  territory. 

WHY  EXPORT  POLICIES  ARE  INDISPENSABLE 

In  justice  to  the  merchants  of  other  lands,  export  policies 
must  be  established  to  protect  the  rights  of  the  buyer.  Con- 
sumers in  Patagonia  and  Paris  have  rights  which  the  exporter 
must  insure  by  the  establishment  of  policies  for  their  protection. 
The  men  whose  time  and  effort  are  given  to  the  development  of  a 
foreign  trade  for  the  enterprises  they  represent  are  entitled  to 
have  their  work  guided  into  safe  harbors  by  policies  which  prevent 
failure  from  preventable  cause. 

Efficiency  demands  the  establishment  of  export  policies. 
Export  policies  insure  that  under  the  same  circumstances 
identical  steps  are  taken,  the  same  quotations  made  and  the 
same  favors  granted,  not  after  extended  and  time-wasting 
investigation,  but  as  a  matter  of  course. 

12 


EXPORT  POLICIES  13 

Policies  Which  Promote  Sales  Expansion. — Export  poli- 
cies make  certain  a  well-balanc(Hl  development.  Markets  are 
sought  and  secured  in  orderly  sequence,  and  the  future  is  never 
handicapped.  Customers  secured  by  merit  of  the  product 
offered  become  co-partners  because  of  the  carrying  out  of  policies 
designed  to  accomplish  this  end.  Logical  markets  are  not 
neglected.  The  tempting  but  unwise  sales  opportunity  is 
examined  by  rule  and  rejected  by  rule,  not  accepted  and  regretted. 
Footholds  gained  are  changed  by  the  execution  of  export  policies 
into  positions  sound  for  both  defense  and  offense. 

It  can  be  stated  with  emphasis  that  success  in  foreign  trade 
depends  upon  the  correct  formulating  of  export  policies  and  not 
upon  governmental  subsidy  or  paternalistic  legislation.  The 
market  places  of  the  world  will  never  become  filled  with  the 
products  of  the  United  States  while  its  exporters  loll  in  their  arm 
chairs  and  await  the  day  when  the  government  will  make  sales 
for  them  and  remit  collected  profits  by  uniformed  messenger. 
Conversely,  it  is  only  equitable  to  all  of  the  people  that  in  each 
piece  of  legislation  and  in  each  treaty  there  be  a  clear  recognition 
of  the  export  interests  and  the  rights  of  the  overseas  trader. 
This  applies  not  only  to  tariffs  and  import  regulations  and  restric- 
tions, but  also  to  all  legislation  which,  directly  or  indirectly, 
affects  the  interests  of  any  other  nation.  Muscles  made  flabby 
by  a  diet  of  pre-digested  food  are  bound  to  prove  treacherous  in 
the.  inevitable  hand-to-hand  conflict  at  the  end  of  each  export 
journey.  Export  pohcies  are  insurance  against  self-placed 
obstacles.  There  are  today  literally  scores  of  exporters  whose 
progress  is  retarded  if  not  permanently  arrested  by  early  and 
unwise  granting  of  exclusive  agencies  in  the  wrong  places. 

A  FAILURE  DUE  TO  ABSENCE  OF  POLICY 

A  typical  example  is  shown  in  the  present-day  situation  of  a 
Pennsylvania  manufacturer.  The  buying  capacity  of  South 
America  would  well  warrant  the  sending  of  a  high-grade  sales- 
man. Because  of  the  lack  of  an  export  policy  of  logical  develop- 
ment, this  manufacturer  has  made  such  an  eminently  desirable 
sales  attack  impossible  to  be  a  profitable  effort.  The  salesman 
could  not  be  successful  in  Brazil  because  of  an  agency  contract 
barring  sales  even  when  the  agent  would  surely  profit  by  them. 

In  Argentine  the  salesman  would  be  bitterly  handicapped — 


14  EXPORT  MERCHANDISING 

hocaiiso  imwisoly  throe  of  the  eleven  alliccl  products  of  the 
manufacturer  are  liekl  under  agency  privileges  by  three  different 
(and  indifferent)  "manufacturer's  representatives."  No  sane 
dealer  could  be  persuaded  to  stock  the  manufacturer's  remaining 
products — it  would  be  as  absurd  as  for  a  hardware  dealer  to 
attempt  to  sell  ice  cream  freezers  without  dashers.  In  Ecuador 
the  salesman  would  receive  a  royal  welcome — from  a  dealer 
agent  on  a  side  street  whose  agency  privileges  and  prices  are  an 
insult  to  the  logical  agency  material  available  once — but  not 
after  such  an  error.  An  identical  situation  is  to  be  found  in 
Colombia. 

With  the  map  of  South  America  before  us  we  can  see  that 
the  only  countries  left  open  for  the  unhandicapped  efforts  of  the 
salesman  are  Uruguay,  Paraguay,  Chile,  Bolivia,  Venezuela  and 
the  Guianas.  To  attempt  to  route  a  salesman  economically 
or  effectively  to  cover  these  "free"  countries  would  be  too  great 
a  task  for  the  most  expert.  Export  policies  prevent  such 
travesties. 

EXECUTIVE  CONTROL 

The  policy  of  executiv'e  control  is  fundamental  in  establish- 
ing an  export  department  or  in  planning  to  develop  a  foreign 
demand  for  one's  product.  Exporting  is  more  than  export 
selling;  it  includes  selling,  manufacturing  and  financing.  All 
these  various  functions  can  be  successfully  harmonized  only 
when  the  person  responsible  for  the  development  of  the  export 
business  is  big  enough  to  be  outside  of,  and  free  from,  all  depart- 
ment prejudices.  The  export  manager  should  have  some 
executive  to  whom  he  can  go  for  consultation  and  for  advice, 
so  he  may  know  that  he  is  constantly  working  in  harmony  with 
the  general  policy  of  his  house.  This  does  not  mean  that  an 
executive  officer  of  the  company  should  pass  on  every  question 
of  export  detail  that  comes  up;  it  does  not  mean  that  he  should 
give  his  entire  time  or  constant  attention  to  the  export  depart- 
ment. There  are  a  number  of  ways  by  which  an  executive  can 
control  and  increase  the  foreign  trade  of  the  company  and  yet 
give  only  an  hour  or  so  a  day  to  the  export  end. 

Control  Methods. — These  ways  can  be  listed: 

The  conference  committee  plan 
The  chart  plan 


EXPORT  POLICIES  15 

The  results  plan 

The  monthly  report  plan 

The  territorial  budget  plan 

Dovetailing  domestic  and  foreign  initiative. 

Again  it  is  apparent  that  one  volume  would  not  be  enough  to 
more  than  sketch  the  details  of  such  a  comprehensive  group. 

The  Conference  Committee  Plan. — There  are  two  angles  to 
the  conference  plan.  The  executive  delegates  to  the  sales 
department  or,  even  better,  to  an  individual  in  the  sales  depart- 
ment, the  authority  to  act  upon  the  plans  made  and  policy 
established.  By  a  half-hour  daily  conference  at  a  definite  time 
the  controlling  hand  is  kept  in  constant  touch  with  the  develop- 
ment. With  each  start  of  a  plan  of  general  interest  a  conference 
of  all  department  heads  is  called  and  a  brief  discussion  invariably 
results  in  each  department's  knowing  not  only  its  own  part  but 
also  the  relation  of  its  part  to  the  plans  as  a  whole. 

Fundamental  Graphic  Visualizations. — The  chart  plan  is 
based  on  weekly  graphs.  These  visualize  by  curves  or  other 
symbols  the  progress  of  foreign  sales  and  sales  expense,  credit 
losses  and  expenditures  of  all  appropriations.  It  can  be  arranged 
to  show  at  a  glance  sales  by  countries  or  other  geographical 
divisions. 

The  results  plan  calls  for  reports  only  when  sales,  expenditures 
or  credit  losses  are  a  stated  per  cent  more  or  less  than  pre-estab- 
lished standards.  In  addition,  reports  show  establishment  of 
new  agents  or  agencies,  progress  of  salesmen,  and  detailed 
returns  from  each  separate  campaign. 

The  monthly  report  plan  can  be  arranged  to  be  either  merely 
a  "results  report"  in  figures  or,  better,  a  dictated  summary  of 
activities. 

It  can  be  arranged  to  cover  each  of  a  varied  line  of  products 
or  be  divided  geographically  so  that  the  monthly  history  in  each 
country  is  covered  by  few  or  many  sentences,  according  to 
matters  of  interest  which  have  transpired  in  the  preceding  month. 

Dovetailing  Domestic  and  Export  Initiative. — The  executive 
mind  will  soon  train  itself  to  the  final  phase,  listed  under  the 
"Hour-a-day  Ideal."  It  will  become  second  nature  to  dovetail 
domestic  and  export  administration.  Instinctively  each  domes- 
tic problem  solved  will  simultaneously  solve  the  export  problem, 
differing  only  in  surface  details.  This  is  the  dividend  of  the 
executive  brain,   which,  with  scarcely  an  additional  conscious 


16  EXPORT  MERCHANDISING 

Ihouglit,  solves  two  piol)lonis  and  providos  a  dual  outlet  for 
productive  sales  ideas. 

MANUFACTURING  POLICY 

It  frequently  happens  that  while  a  demand  may  exist  abroad 
for  a  commodity,  the  market  requires  that  some  change  in  the 
standardized  American  product  be  made;  for  example,  changing 
the  steering  wheel  on  an  automobile  intended  for  use  in  England 
from  the  left  to  the  right-hand  side,  because  the  English  rule 
of  the  road  is  to  the  left  instead  of  to  the  right. 

Preparation  for  Exporting. — A  decision  on  the  part  of  the 
manufacturer  to  export  may  entail  changes  in  the  factory.  It 
may  be  necessary  to  increase  factory  space  to  take  care  of  export 
orders;  it  may  be  necessary  to  install  in  the  factory  equipment  to 
make  a  product  that  will  sell  abroad,  e.g.,  certain  foreign  countries 
want  shoes  with  a  short  vamp;  to  make  them  the  shoe  manufac- 
turer must  make  a  considerable  investment  in  lasts  with  short 
foreparts. 

Preparing  goods  for  export  may  necessitate  certain  modifica- 
tions in  the  domestic  manufacture,  as  a  manufacturer  who  has 
been  putting  his  product  into  a  certain  kind  of  a  container  may 
find  that  that  container  is  not  suitable  for  export  trade;  that  it  is 
not  feasible  for  him  to  use  one  kind  of  a  container  for  export 
trade  and  another  kind  for  domestic  trade;  and  so,  if  he  is  to 
export,  he  must  adopt  a  new  container  which  will  be  suitable  for 
both  export  and  domestic  trade. 

It  is  not  the  intention  here  to  delve  deeply  into  the  problems 
of  "special  packing"  of  export  shipments.  As  a  matter  of 
policy,  however,  it  should  be  emphasized  that  any  deviations 
from  normal  packing  should  be  based  upon  definite  facts.  There 
is  a  vast  difference  between  a  scientific  investigation  of  require- 
ments and  the  off-hand  acceptance  of  suggestions  made  by 
importers  abroad  or  the  folly  of  the  belief  that  the  merchant  in 
the  foreign  field  never  knows  what  is  needed. 

Innumerable  questions  similar  to  these  arise,  depending  upon 
the  product,  the  process  of  manufacture  and  the  method  of 
packing. 

The  Basis  of  Manufacturing  Policy. — When  an  American 
manufacturer  decides  definitely  to  undertake  exporting,  he  must 
determine  what  manufacturing  problems  he  is  to  encounter  and 


EXPORT  POLICIES  17 

what  his  poHcy  is  to  })C  in  regard  to  each  one.  If  he  does  not  do 
this,  he  is  in  danger  of  vacillating  between  blunt  refusals  to  meet 
the  trade  demands  abroad  on  the  one  hand,  and  expensive 
changes  in  production  methods  on  the  other. 

It  is  important  that  the  manufacturing  policy  should  be  fully 
determined  before  the  first  line  of  export  samples  is  manufactured. 
Selection  of  Exportable  Articles. — The  next  logical  step  is  the 
decision  on  the  part  of  the  manufacturer  as  to  what  articles  he 
shall  export.  Manufacturers  whose  domestic  catalogs  contain 
a  wide  variety  of  articles  may  not,  for  one  reason  or  another, 
desire  to  create  an  export  market  for  all.  On  some  articles 
conditions  in  the  factory  may  limit  the  output  to  what  the 
domestic  trade  can  absorb  readily.  Other  articles  may  be  sold 
on  an  exceedingly  narrow  margin  of  profit,  or  at  some  disadvan- 
tage to  the  manufacturer,  for  the  purpose  of  rounding  out  a  line 
or  of  meeting  competition  and,  therefore,  may  not  be  needed  in 
export  trade.  Other  articles  may  not  be  exportable;  still  others 
may  be  in  a  more  or  less  experimental  stage,  and  it  would  be 
unwise  to  export  them  until  they  have  been  tested  out  at  home. 
Hence  the  first  thing  for  the  export  manager  to  do  is  to  select 
from  the  entire  line  that  his  company  manufactures,  those 
particular  articles,  or  items,  on  which  he  intends  to  build,  or  at 
least  to  start,  his  export  business. 

PRICING  GOODS  FOR  EXPORT 

The  only  sound  reason  for  exporting  is  net  profit  over  a  period 
of  years.  Regardless  of  all  else,  prices  must  be  on  a  basis  that 
will,  over  a  period  of  years,  show  a  net  profit.  This  does  not 
mean  that  the  profit  must  show  the  first  month  or  the  first  twelve 
months;  but  it  does  mean  that  the  goods  must  be  priced  in  such 
a  way  that  the  introducing,  advertising,  and  other  expenses 
which  may  more  than  eat  up  the  profit  at  first,  may  be  paid  for 
later.     This  means  scientific  pricing,  and  must  be  based  on: 

A.  Production  or  factory  costs — including  factory  overhead 

B.  Selling  costs 

C.  Administrative  expenses. 

In  every  well-ordered  company,  the  factory  costs  are  figured 
accurately.  The  other  costs  should  be  so  figured,  and  it  should 
be  borne  in  mind  that  quoting  prices  is  serious  business,  and  no 
prices  should  be  given  out  that  cannot  be  lived  up  to. 


18  EXPORT  MERCHANDISING 

The  exporter  should  make  certain  that  his  prices  inchide  ade- 
(juatc  profit,  to  secure  which  may  recjuire  a  somewhat  larger 
margin  than  on  domestic  sales. 

Extra  sales  effort  is  to  be  anticipated  in  an  international 
market.  To  the  novice  in  exporting  obviously  greater  risk  is 
inevitable   because   of   contact   with   new   circumstances. 

Testing  the  Tentative  Price. — Having  arrived  at  a  price  by 
adding  costs  and  profit,  it  is  necessary  to  determine  the  salabil- 
ity  of  the  article  at  that  price  in  a  competitive  market.  Even  if 
the  price  at  which  the  manufacturer  must  sell  his  product  is 
somewhat  higher  than  that  prevailing  for  similar  articles  in 
foreign  markets  does  not  furnish  any  more  reason  for  despair  than 
a  similar  condition  in  the  domestic  market.  Foreign  customers  as 
well  as  domestic  appreciate  quality.  The  better  the  article,  the 
more  readily  can  it  absorb  the  transportation  and  tariff  charges. 
In  exporting  a  manufactured,  branded  article  of  good  quality 
the  American  manufacturer  should  not  hesitate  to  place  a  fair 
price  on  it.  And  if  a  market  will  not  pay  a  fair  price,  it  should 
not  be  cultivated. 

When  the  price  has  been  established  at  which  an  article  must 
be  sold  the  question  of  method  of  quoting  prices  arises.  In 
practice  this  often  involves  the  use  of  list  prices  and  trade  dis- 
counts which  vary  according  to  class  of  customers,  quantity 
purchased  and  other  factors. 

Why  Discounts  Vary. — The  price  to  the  small  retailer  usually 
should  be  higher  to  enable  the  exporter  to  give  greater  discounts 
to  larger  buyers.  Often  the  manufacturer  will  have  as  a  repre- 
sentative in  a  country  an  importer  who  buj-s  for  his  own  account. 
He  must,  of  course,  have  the  rock-bottom  price,  which  should 
be  the  cost  of  production,  plus  the  handling  cost,  plus  a 
reasonable  profit.  There  may  be  in  that  territory  large  whole- 
salers who  insist  on  importing  direct  from  the  manufacturer. 
Many  times  it  is  easy  to  induce  the  importing  agent  to  agree  to  an 
arrangement  whereby  he  is  paid  commissions  on  the  purchases 
of  these  wholesalers. 

To  give  the  agent  this  commission,  it  is  necessary  that  the 
wholesaler  should  pay  more  than  the  importer.  Similarly, 
there  may  be  some  large  department  store  or  other  large  retailer 
in  some  city  which  insists  on  buying  direct  from  the  factory. 
Here,  again,  arrangements  can  be  made  with  the  importer  and 
with  the  wholesaler  that  will  permit  the  large  retailer  to  import 


EXPORT  POLICIES  19 

directly,  provided  the  wholesaler  receives  a  commission  and  the 
importing  agent  receives  a  commission.  This,  of  coiu'se,  means 
that  the  retailer  must  pay  a  higher  price  than  the  wholesaler, 
who,  in  turn,  must  pay  more  than  the  importing  agent.  But 
the  large  retailer  need  not  pay  as  much  as  the  small  retailer. 

The  Menace  of  Incorrect  Pricing. — All  this  is  perfectly  just 
and  logical  and  is  easily  arranged,  if  it  is  planned  for  in  advance. 
But  unless  it  is  planned  for  definitely,  and  unless  each  customer 
in  a  given  territory  who  buys  direct  from  the  manufacturer  is 
analyzed  and  catalogued  as  to  his  exact  relation  with  the  other 
buyers,  confusion  is  almost  certain  to  result,  together  with  a 
demand  upon  the  manufacturer  for  further  discounts  and  allow- 
ances. One  manufacturer  sent  out  a  catalog  to  the  retail  trade 
based  on  his  lowest  selling  prices.  He  obtained  orders  from 
retailers  which  he  filled.  The  line  proved  to  meet  popular 
demand.  Wholesalers  and  importers  were  interested,  but  the 
maker  could  not  sell  the  wholesalers  because  he  could  not  afford 
to  give  them  a  better  price  than  had  already  been  given  to  the 
retailers.  As  a  direct  result  the  line  was  never  sold  in  large 
quantities — ultimately  was  not  sold  at  all. 

In  foreign  trade  as  in  domestic,  the  salesman  is  likely  to 
overestimate  the  importance  of  price  competition.  It  is  natural 
for  the  buyer,  in  looking  at  a  line  of  high-priced  goods,  to  tell  the 
salesman  a  named  competitive  line  can  be  bought  cheaper. 
The  buyer  usually  tells  the  truth,  but  selects  a  line  whose  prices 
and  quality  are  both  low.  Frequently  the  comparison  is  so 
obviously  unfair  that  it  suggests  its  own  answer.  But  in  other 
cases  where  the  competition  is  from  a  foreign  country — such 
competition  as  England  might  give  us  in  Argentina — the  export 
manager  may  not  be  familiar  enough  with  the  competition  to 
explain  his  high  prices.  But  if  a  factory  is  properly  organized 
and  is  not  charging  unreasonably  large  profit,  it  is  usual  to  find 
that  if  his  prices  are  higher  than  his  competitors',  his  goods  are 
better.  Not  only  the  trade  but  also  the  consumer  will  recognize 
this  and  will  buy  largely  of  the  better  goods. 

Solving  Problems  Which  Test  Rules. — There  are  exceptions 
which  at  first  perplex.  In  a  certain  foreign  country  two  lines 
of  shoes  dominate  the  market.  One  of  these  lines  is  ordinarily 
regarded  here  as  being  far  superior  to  the  other — at  least  two 
grades  higher.  In  this  foreign  country  both  sell  for  practically 
the  same  price.     If  there  is  any  preference  it  seems  to  lie  with 


20  EXPORT  MERCHANDISING 

the  line  which  in  this  country  is  sold  cheaper.  The  explanation 
lies  in  the  better  merchandising  of  the  lower-grade  shoe. 

No  American  manufacturer  can  afford  to  turn  his  back  on 
foreign  competition.  He  should  keep  widely  awake  to  it.  But 
he  should  also  realize  that  his  competitors,  both  in  this  country 
and  abroad,  are  obliged  to  do  business  on  a  business  basis.  If 
they  undersell  him,  there  is  probably  some  reason  for  doing  so. 
If  each  American  manufacturer  will  but  analyze  the  competition 
exactly  the  way  he  is  accustomed  to  do  in  this  country  he  will 
find  wherein  his  product  excels.  Then  he  can  use  this  superiority 
as  a  selling  argument;  so  that  really  his  high  price  will  be  an 
advantage  rather  than  a  detriment. 

Unfair  Price  Competition. — In  the  past,  some  American 
manufacturers  have  been  guilty  of  needlessly  selling  their 
products  abroad  cheaper  than  they  sold  them  at  home.  Many 
have  figured  that  their  sales  in  the  domestic  market  carried  their 
entire  administration  overhead,  so  that  any  sales  they  made  in 
foreign  countries  were  "velvet,"  and  that  it  was  necessary  only 
to  figure  the  cost  of  material,  wages  and  actual  operating  expenses 
on  goods  shipped  to  the  foreign  country.  This  enabled  them  to 
undersell  other  competitors  who  were  figuring  their  costs  honestly. 
This  virtually  constitutes  unfair  competition.  The  Webb  Act 
specifically  forbids  unfair  competition  in  the  case  of  Webb  Act 
corporations. 

It  is  reasonable  to  feel  that  the  Federal  Trade  Commission  will 
take  a  decided  stand  when  such  practices  are  brought  to  its 
attention.  Apart  from  this,  it  usually  is  poor  business  to  dis- 
tribute arbitrarily  any  part  of  the  cost  of  running  a  business. 

SALES  POLICY 

The  manufacturer  going  into  the  export  field  finds  two  distinct 
methods  of  selling  open  to  him  in  practically  every  market — the 
direct  and  the  indirect. 

Direct  selling  means  dealing  directly  with  the  customer 
in  the  foreign  country,  soliciting  the  order,  arranging  for  its 
financing,  packing,  shipping  and  collecting. 

Indirect  selling  means  selling  the  goods  to  a  third  party 
who  secures  the  order,  arranges  for  the  financing,  gives  instruc- 
tions for  packing,  and  who  ships  the  order  for  the  manufacturer. 

Advantages  of  Indirect  Selling. — There  is  no  question  that  the 


EXPORT  POLICIES  21 

indirect  method  is  much  more  simple.  It  is  a  serious  question 
whether  it  alwaj's  brings  the  best  results.  Indirect  selling  may  be 
done  through  commission  houses,  export  merchants  or  manu- 
facturers' agents.  Direct  selling  may  be  done  through  branch 
houses,  traveling  salesmen,  resident  representatives  or  by  mail. 
All  these  subdivisions  will  be  fully  discussed  in  later  chapters. 
But  the  manufacturer  should  decide  whether  he  is  going  to  l)e 
committed  to  either  indirect  or  direct  selling,  or  the  one  method 
in  some  territories  and  the  other  method  in  others.  A  manu- 
facturer entering  export  business  should  have  a  sales  policy  and 
should  decide  upon  his  sales  method,  and  not  leave  the  decision 
until  an  application  backed  by  a  small  order  comes  in  and 
demands  an  immediate  decision. 

CREDIT  POLICY 

Merchandise  can  be  marketed  abroad  either  on  a  policy 
based  on  cash  payments  before  shipment  or  on  arrival  of  goods, 
or  on  the  extension  of  time  after  arrival  of  goods  at  destination. 
Any  policy  which  results  in  the  extension  of  time  after  delivery 
of  goods  is  based  upon  acceptance  of  the  truth  that  credit  attaches 
itself  to  the  individual,  and  the  complementary  truth  that  credit 
permits  a  far  greater  volume  of  business  than  is  possible  based 
upon  cash  payments.  Each  manufacturing  exporter  must  decide 
for  himself,  based  on  his  own  financial  strength,  whether  his 
decision  involves  extension  of  time  in  which  the  importer  can,  in 
part  or  in  full,  pay  for  his  purchases  from  the  proceeds  of  the  sale 
of  the  imported  merchandise. 

It  is  generally  recognized  that  because  experience  has  proved 
foreign  credit  losses  to  average  less  than  losses  on  a  similar 
volume  of  domestic  business,  a  policy  can  safely  be  adopted 
which  permits  extension  of  time  to  foreign  buyers.  This  policy 
does  not  of  necessity  tie  up  otherwise  liquid  assets.  Because  of 
documentary  draft  procedure  which  prevails  in  international 
commercial  exchange,  two-name  paper  comes  into  existence  and 
forms  the  basis  of  collateral  on  which  banking  institutions  are 
accustomed  to  advance  money.  In  the  determination  of  a 
credit  policy  the  exporting  manufacturer  can  thus  divorce  from 
the  problem  the  thought  that  his  cash  resources  are  diminished 
by  foreign  trade.  As  a  matter  of  fact,  thoy  are  increased,  l)ccause 
he  is  turning  his  raw  materials,  plus  production  and  overhead 


22  EXPORT  MERCHANDISING 

costs,  into  a  greater  sum  ])y  the  addition  of  his  legitimate  profit  on 
his  foreign  sales. 

Long  Credits  Detrimental. — Having  determined  upon  a 
policy  which  involves  the  extension  of  time,  a  policy  should  be 
established  which  controls  the  amount  of  time  extended  to 
importers  abroad.  Contrary  to  a  once  widely  prevalent  belief, 
six-,  nine-  and  twelve-month  credits  are  a  detriment  rather  than 
an  asset  in  the  importation  of  many  lines  of  merchandise.  If  the 
importer  can  liquidate  his  stock  in  three  months,  it  is  a  detriment 
rather  than  a  help  to  him  to  have  six  months  in  which  to  pay  the 
amount  of  the  invoice.  For,  not  being  called  upon  to  make  pay- 
ment when  the  proceeds  of  the  sale  are  in  his  hands,  he  is  tempted 
to  reinvest  those  proceeds,  or  to  speculate,  as  he  is  thus  placed  in 
possession  of  funds  in  excess  of  the  legitimate  requirements  of  his 
business.  It  is  conceivable  that  the  proceeds  from  the  sale  of  an 
American  invoice  may  be  used  for  the  purchase  of  goods  manu- 
factured in  another  foreign  country,  and  the  funds  may  not  be 
available  at  the  end  of  six  months  when  the  original  bill  is  due. 
The  entire  fabric  of  sane  foreign  credits  is  woven  from  the  threads 
of  common  sense. 

Advertising  Policy. — Advertising,  in  export  as  in  domestic 
business,  may  be  used  to  market  a  product,  or  to  build  up  good- 
will, or  even  to  introduce  a  salesman.  It  may  be  directed  to  the 
dealer  or  to  the  consumer.  It  may  be  carried  on  by  mail  or 
through  the  pages  of  export  journals  published  in  this  country 
and  circulated  abroad,  or  through  papers  published  in  foreign 
countries  and  having  local  circulation. 

The  policy  should  decide:  First,  who  is  to  })e  reached;  second, 
through  what  media;  third,  how  long  a  period  should  be  devoted 
to  the  advertising;  fourth,  how  much  money  should  be  expended 
in  the  effort,  and  fifth,  the  type  of  appeal. 


CHAPTER  IV 
ORGANIZING  FOR  EXPORTING 

"Above  all,  the  export  department  should  be  given  full  and 
constant  consideration,  and  not  treated  in  an  opportunist  spirit 
as  a  mere  adjunct,  a  non-essential  speculation,  to  be  pushed  or 
neglected  at  convenience." — Frank  M.  Dudeney. 

Vital  Factors  in  Organizing.  The  Allied  Conipany.  The  Selling  Com- 
pany. The  Separate  Export  Department.  Cooperation  between  Depart- 
ments. The  Export  Appropriation.  Items  of  Export  Expense.  The  First 
Year  in  Exporting.  A  Typical  First  Year's  E.tport  Appropriation.  Later 
Appropriations.  How  to  Use  an  Experimental  Appropriation  Effectively. 
Personnel  of  Typical  Export  Organizations. 

There  can  be  no  "rule  of  thumb"  measurement  which  will 
determine  the  exact  type  of  organization  which  will  best  serve  a 
manufacturer  in  his  quest  for  profits  from  export  trade.  The 
size  of  the  enterprise — the  nature  of  the  product — ^the  amount  of 
production  available,  actual  or  potential — ^the  existing  domestic 
sales  organization — these  are  vital  factors  in  reaching  a  correct 
decision. 

The  four  outstanding  forms  of  organization  are: 

1.  The  Allied  Company 

2.  The  Selling  Company 

3.  The  Separate  Export  Department 

4.  The  "Built-in"  Export  Department. 

The  Allied  Company. — The  allied  company  is  a  device  whereby, 
on  outright  purchase  or  royalty  division,  a  firm's  name  is  taken 
over  for  definite  territory  by  a  separate  corporation,  which  may 
be  controlled  either  by  men  associated  with  the  export  company 
or  by  outsiders.  Such  arrangements  may  involve  patent  rights. 
Sometimes  they  are  necessitated  by  statutes  imposing  prohibitory 
conditions  on  foreign  companies.  The  allied  company  is 
frequently  employed  as  a  means  of  dividing  financial  responsi- 
bility by  certain  lines  subjected  to  abnormal  commercial  risks. 
Here  as  abroad,  in  such  extra-hazardous  ventures,  it  is  not  an 
unknown  practice  for  investors  to  divide  their  holdings,  so  that 
they  are  self-insin'ing. 

23 


24  EXPORT  MERCHANDISING 

The  allied  company  is  really  more  of  a  financial  than  an  export 
device.  Unless  conditions  prohibit  exporting  by  other  means, 
it  should  be  considered  a  last  resort,  rather  than  a  tool  to  be  used 
in  connection  with  any  phase  of  direct  exporting.  There  are 
exceptions  in  the  successful  allied  companies  of  some  of  the 
very  largest  industries.  It  must  be  granted,  however,  that  the 
manufacturer  who  adds  intricate  financial  arrangements  to  his 
export  sales  problems  complicates  matters  at  a  time  when  he 
should  be  simplifying  them.  Selling  his  overseas  possibilities 
to  the  allied  company  is  usually  an  admission  of  inability  to 
handle  the  situation  in  foreign  markets. 

The  Selling  Company. — A  selling  company  is  a  form  of  organi- 
zation entirely  distinct  from  that  of  an  allied  company.  In 
brief,  a  selling  company  is  a  separate  sales  department  of  a 
business,  which  buys  either  at  prices  stated  in  advance  or 
determined  at  the  end  of  each  year  and  based  on  cost.  Its 
business  is  confined  to  selling,  whereas  an  allied  company  may 
manufacture  abroad,  as  well  as  control  patent  rights.  The  U.  S. 
Steel  Products  Co.  and  the  U.  S.  Rubber  Export  Co.  are  examples 
of  the  selling  company. 

A  business  may  reach  that  point  in  its  growth  where  the  use 
of  its  domestic  trade  machinery  in  foreign  selling  ceases  to  be  an 
economy.  It  is  here  that  the  establishment  of  a  selling  company 
often  brings  more  rapid  development  to  both  home  and  foreign 
business  by  separating  the  two  interests,  by  assigning  the 
responsibilities  to  different  organizations,  and  thus  eliminating 
the  complications  bound  to  enter  into  the  human  problem  when 
dual  duties  rest  upon  the  same  man  or  set  of  men. 

The  Separate  Export  Department. — The  dividing  line  between 
a  selling  company  and  a  separate  export  department  within  the 
company  cannot  be  clearly  drawn.  Minor  differences  exist  in 
some  cases,  and  clearly  defined  ones  in  others.  A  separate 
export  department  within  a  company,  for  instance,  may  assume 
direct  control  over  such  matters  as  foreign  advertising,  foreign 
credits,  foreign  shipping  and  foreign  collections.  It  may 
possibly  have  even  a  separate  manufacturing  department  for 
certain  products  not  sold  in  the  United  States. 

There  is  no  set  formula  upon  which  to  depend  in  determining 
just  where  the  exclusive  activities  of  a  separate  export  department 
shall  begin  or  end.  It  is  a  matter  of  executive  policy  based 
on  the  best  interests  of  the  business  as  a  whole.     The  simplest 


ORGANIZING  FOR  EXPORTING  25 

form  is  obviously  that  of  the  separate  sales  department.  With 
less  than  that  it  falls  into  the  class  deseril)ed  in  subsequent 
paragraphs.  On  the  largest  scale,  its  functions  go  clear  to  the 
border  line  of  the  separate  selling  company. 

The  "Built-in"  Department. — ^The  arguments  in  favor  of  a 
"built-in"  policy  for  the  development  of  foreign  sales  are  based 
on  broad  grounds  and  deserve  the  utmost  consideration  before 
an  export  system  of  organization  is  finally  chosen. 

Trace  a  single  order  from  its  receipt.  If  the  one  man  respon- 
sible for  the  sales  end  of  exporting  is  to  handle  all  foreign  business 
without  interference  (or  assistance)  it  is  obvious  that  he  will 
be  a  fairly  busy  man.  If  he  looks  after  all  the  ends  of  exporting; 
if  he  opens  the  envelope,  unfolds  the  order,  gives  it  an  account 
number,  prices  it,  gives  detailed  instructions  as  to  its  terms, 
method  of  packing,  proper  classification  for  billing;  if  he  enters  it, 
conveys  to  the  different  departments  the  proper  copies,  registers 
it,  enters  it  on  the  several  history  records,  orders  stock  and 
packing,  handles  the  advertising  matter  and  samples,  cases  it, 
stencils  it,  packs  it  for  car  shipment  to  the  terminal;  if  he  credits 
it,  bills  it,  registers  it  from  draw-back,  attends  to  drafts,  then 
attends  to  collection  of  the  account  and  the  draw-backs,  and 
incidentally  acknowledges  it;  if  he  enters  it  for  the  year's  sum- 
mary (geographical  and  financial),  follows  it  up,  secures  addi- 
tional information  on  the  account,  sees  that  the  proper  salesman 
gets  a  record  of  the  transaction,  and  that  the  resident  agent  is 
advised  and  receives  his  credit  memo. — if  he  attends  to  all  these 
duties,  assuredly  his  days  will  be  fully  occupied,  with  little 
time  left  for  plans  to  seek  more  business. 

It  is  logical  that  the  export  end  of  a  business  should  use  such 
tools  as  are  available  in  the  business  rather  than  build  an  entirely 
new  set.  Every  good  business  man  knows  that  danger  exists 
when  responsibility  for  sales  and  for  credits  is  joined  in  the  same 
individual  or  department.  The  principle  that  the  man  who  sells 
should  be  the  last  man  to  pass  on  the  credit  of  orders  he  obtains  is 
unchanged  by  the  mysterious  word  "export."  In  the  face  of  this 
truth  the  export  manager  in  many  concerns  frequently  passes  on 
foreign  credit  risks.  Foreign  credits  are  primarily  based  on  the 
same  three  C's — Character,  Capability  and  Capital — which  form 
the  foundation  for  domestic  credit.  If  this  be  true,  then  the 
domestic  credit  department,  in  cooperation  with  the  export 
department,  can  bring  to  the  handling  of  foreign  business  a  degree 


26  EXPORT  MERCHANDISING 

of  specialized  kn()\vl(Mlj;('  which  alone  can  yield  the  maximum 
of  orders  with  the  minimum  of  losses. 

Too  often  it  is  assumed  that  a  specialist  is  required  for  every 
phase  of  overseas  trade,  even  when  these  phases  directly  cor- 
respond to  phases  of  domestic  trade,  so  far  as  fundamentals 
enter.     The  differences  are  only  surface  details. 

Fortunately,  it  is  a  matter  of  daily  proof  in  hundreds  of  well- 
organized  houses  with  established  export  sales  that  the  only  real 
need  is  to  acquaint  the  several  departments  already  existing 
with  the  actual  surface  differences.  These  once  mastered  give 
to  the  export  enterprise  not  only  the  experience  of  the  lousiness 
as  a  whole,  but  also  the  individual  experience  and  judgment  of 
every  man  in  every  department  through  which  the  export  order 
may  pass. 

Export  sales,  like  domestic  sales,  cost  money  to  secure.  From 
the  2  per  cent  of  the  sales  volume  of  a  large  exporter  of  an 
automobile  necessity  to  the  60  per  cent  sales  expense  of  an  auto- 
mobile luxury,  the  relation  of  cost  to  sales  volume  can  be  fixed 
only  by  the  profit  margin,  common  sense  and  the  proportion  of 
established  to  undeveloped  foreign  business. 

The  determining  element  in  export  expenditures  is  value. 
It  may  be  worth  50  per  cent  of  the  total  sales  of  a  traveler's  first 
trip  to  establish  new  connections;  it  may  be  worth  30  per  cent  to 
nurse  a  territory  along  in  early  years,  and  still  be  a  gross  extra- 
vagance to  over-fertilize  a  yielding  territory  by  a  10  per  cent 
sales  expense. 

Testing  the  Export  Plan. — Only  a  carefully  considered  policy 
warrants  speculative  export  investment  which  should  only  exist 
as  part  of  a  well-considered  whole. 

A  definite  export  plan  alone  justifies  any  export  appropriation. 
The  firm  that  examines  its  finances  and  lays  aside  $1,000  or 
$100,000  as  the  amount  which  its  export  appropriation  shall  be, 
endeavors  to  reverse  every  normal  business  principle,  whereas, 
the  firm  that  formulates  plans  for  the  development  of  a  profitable 
export  lousiness,  can  then  wisely  modify  these  to  meet  financial 
limitations. 

DETERMINING  THE  EXPORTABILITY  OF  A  PRODUCT 

The  two  most  common  classes  interested  in  export  sales  are, 
non-exporting  manufacturers  and  exporters  without  world-wide 


ORGANIZING  FOR  EXPORTING  27 

distribution.  The  first  export  appropriation  should  be  to  cover 
the  cost  of  determining  the  exportabihty  of  the  product  manu- 
factured. For  the  greatest  net  profit  during  the  first  year  it 
should  involve  common  sense  and  postage. 

Tests  in  English-speaking  Markets. — A  sound  platform  for 
the  first  appropriation  is  postage  plus  dealer  samples  to  cover 
an  English-speaking  foreign  market.  In  a  stroke,  this  eliminates 
the  translation  question.  It  enables  the  use  of  an  existing  assort- 
ment of  advertising  matter,  including  signs  and  dealer  literature. 

India,  for  example,  normally  offers  many  good  points  on 
account  of  low  duties  and  broad  tastes,  while  from  mistakes  in 
Bombay,  Calcutta  and  Madras  the  manufacturer  can  learn  what 
to  avoid  in  Melbourne,  Bermuda  and  Shanghai — for  the  traits 
of  the  English  colonial  dependency  vary  only  in  shades,  not  in 
fundamentals. 

Division  of  Planning  and  Performance. — The  moment  indica- 
tions show  that  a  line  is  right  in  meeting  existing  demand,  the 
serious  part  of  the  export  appropriation  must  be  considered.  In 
exporting,  the  mechanical  part  can  be  entrusted  to  a  capable 
clerk,  and  the  executive  part  handled  by  an  interested  executive, 
until  prospective  sales  volume  makes  it  economy  to  assign  all 
matters  of  real  importance  to  a  created  export  department  head. 

A  clerk  of  the  requisite  capacity  can  be  found  in  almost  every 
business.  The  position  may  well  solve  the  question  of  the 
employee  who  for  the  good  of  the  business  as  well  as  himself 
needs  a  chance  to  show  his  calibre  in  high-grade  routine. 

The  first  item  of  export  sales  expense  is  his  salary,  which 
should  not  exceed  that  of  a  Class  A  clerk;  but  he  deserves  ad- 
vancement in  salary  and  position  in  proportion  to  the  growth  of 
the  export  business  and  his  part  in  it.  As  it  will  take  a  full  year 
to  test  the  profitableness  of  exporting  after  the  exportabihty  of 
a  line  has  been  established,  this,  like  all  items  on  your  second 
export  appropriation,  should  be  figured  on  an  annual  basis. 

Sources  of  Service  and  Information. — The  next  item  of  the 
initial  export  appropriation  covers  sources  of  export  information. 
From  the  moment  a  manufacturer  decides  to  consider  exporting 
seriously,  he  naturally  also  ceases  to  desire  to  rely  solely  on 
gratuitous  information  on  every  point.  He  requires  the  services 
of  organizations  equipped  to  supply  promptly  all  data  he  desires. 

Certain  chambers  of  commerce  are  able  to  supply  credit  data, 
lists  of  prospective  customers,  duties,  and  the  thousand  and  one 


28  EXPORT  MERCHANDISING 

essentials  to  serious  exporting.  But  even  in  such  a  felicitous 
situation  the  manufacturer  will  not  err  in  identifying  himself 
from  the  start  with  the  two  leading  service  organizations  specializ- 
ing on  export  matters,  whether  his  headquarters  arc  in  Portland, 
Maine,  or  Portland,  Oregon. 

The  Export  Man's  Equipment. — The  third  appropriation  item 
is  a  minor  one,  but,  strangely,  the  most  neglected.  The  best 
atlases  and  gazetteers  are  cheap  sales  weapons  and  time-savers; 
the  few  books  and  guides  to  good  exporting  are  actual  necessities 
and  they  eliminate  many  errors;  the  government  publications  on 
market  conditions  and  credit  are  business-builders;  while  the  one 
volume  on  customs  tariffs  is  constantly  needed  for  reference 
purposes.  The  export  library  should  be  as  complete  as  the 
limited  field  offers.  One  hundred  dollars  will  not  only  cover  the 
publications  mentioned,  but  include  a  good  text  book  on  business 
sales  letters  and  a  few  small  dictionaries  in  foreign  languages  for 
emergencies. 

FIRST  STEPS  IN  EXPORT  SELLING 

With  the  export  clerk,  service  and  literature  covered,  the  next 
decision  must  be  the  policy  to  adopt  towards  methods  of  securing 
business.  Except  under  unusual  conditions  the  first  year's  export 
appropriation  should  not  include  the  service  of  an  export  sales- 
man, either  of  the  combination  or  exclusive  variety. 

The  first  duty  in  seeking  foreign  trade  is  to  find  a  market 
which  will  yield  a  profit  and  show  dividends  as  soon  as  possible, 
so  that  the  export  department  may  become  self-supporting  at 
an  early  age.  Then  follows  the  search  for  other  good  markets 
and  a  general  division  of  markets  for  intensive  and  educational 
efforts. 

Export  advertising  has  its  part  in  the  first  year's  merchandising 
dependent  on  the  nature  of  the  product  and  the  merchandising 
policy  which  has  been  selected.  Advertising  is  effective  as  a 
business-creator  and  it  is  also  an  important  business  aid  until 
the  new  exporter  has  ability  to  follow  up  inquiries.  It  is  of  first 
importance  only  when  executive  time  devoted  to  export  is  of 
necessity  too  limited  to  ensure  securing  the  full  value  of  export 
institutional  service — which  is  a  latent  value  and  not  a  spon- 
taneous aid.  Manifestly  the  export  journal  must  secure  results 
for  its  clients  or  lose  its  advertising.     It  is,  therefore,  obviously  a 


ORGANIZING  FOR  EXPORTING  29 

substitute  for  export  institutional  service  where  proper  supervi- 
sion and  stimulation  cannot  come  from  the  inside  as  well  as  a 
selling  force. 

The  first  year's  export  work  should  include  a  careful  considera- 
tion of  the  various  media,  their  fields  and  their  sales  service. 
Sooner  or  later,  and  usually  early  in  the  second  year,  export 
advertising  should  appear  in  the  investment  column. 

The  Use  of  the  Mails. — The  real  item  of  expense  in  the  first 
year  to  be  given  every  attention  relates  to  mail  solicitation. 
Not  only  does  this  involve  postage,  but  translations  both  of 
letters  and  literature.  Fortunately,  in  most  lines  an  export 
catalog,  even  in  a  foreign  language,  need  not  involve  as  great  an 
expense  as  the  domestic  catalog.  There  is  decided  advantage 
in  concentrating  on  the  best  selling  staples  and  novelties,  includ- 
ing only  enough  to  indicate  the  range  of  the  line  while  featuring 
the  probable  best  sellers  and  profit-makers. 

Envelope  enclosures  built  to  be  an  integral  part  of  a  series  of 
sales  letters  and  to  drive  home  the  note  of  appeal  each  letter 
carries,  are  among  the  best  dividend  makers  in  export  sales 
effort  via  the  mail  route.  The  added  expense  of  the  best  type 
of  illustrations,  whether  they  involve  color  work  or  half-tone, 
is  often  the  economical,  for  it  must  be  borne  in  mind  that  a  live 
salesman  and  a  simple  catalog  cost  more  than  a  postage  stamp 
and  a  natural  color  and  smaller  price  list. 

Sampling. — If  the  manufacturer  is  fortunate  in  marketing 
a  line  permitting  the  use  of  mailable  samples  and  has  an  atom 
of  faith  that  inspection  and  test  will  show  their  value,  the  sample 
appropriation  should  be  elastic.  Samples  are  tangible.  The 
submission  of  samples  as  the  best  sales  argument  may  result 
in  orders  where  the  most  persuasive  or  most  forceful  letter  will 
fall  flat. 

With  such  a  product  as  automobiles  or  machinery,  which 
automatically  bar  sampling,  a  manufacturer  is  more  than 
justified  in  the  most  effective  presentation  of  his  product  by 
photograph  and  drawing.  A  liberal  allowance  for  these  is  a 
legitimate  item  in  figuring  probable  cost  of  doing  foreign  business. 

Miscellaneous  Expense  Items. — Incidentals  include  enter- 
tainment of  visiting  foreign  buyers  and  attendance  at  selected 
export  trade  conferences  in  order  to  make  the  personal  acquain- 
tance of  experienced  export  men.  These  are  the  most  profitable 
items  of  any  appropriation.     A  single  agent  added  from  such  a 


30  EXPORT  MERCHANDTSTNG 

contact  will  pay  dividends  for  decades.  The  slight  expense  of 
Spanish,  French,  Portuguese  and  other  direction  slips  not 
included  in  sales  literature,  are  further  creditors.  All  in  all, 
these  items  will  total  (according  to  good  fortune  and  necessities) 
SI, 000,  if  full  advantage  is  taken  of  every  opportunity  to  invest 
for  profit,  or  only  a  very  few  hundred  if  there  is  necessity  for 
reducing  export  expense  to  the  minimum. 

A  TYPICAL  FIRST  YEAR'S  APPROPRIATION 

To  reduce  the  matter  to  definite  figures: 

First  year's  export  appropriation  of 
The  John  Jones  Manufacturing  Co. 

1  Export  Clerk  at  $25  per  week $1,300 

Export  Service  (membership) 150 

Export  Service,  extra  translations 150 

Export  Service,  extra  credit  reports 50 

Export  Library 100 

Export  Literature  and  Price  List 500 

5,000  letters  at  12ff.  each  (Cost  includes  Stenographer, 

Postage  and  Stationery) 600 

1,200  Samples  at  7ff.  each 84 

Incidentals 1,000 


$3,934 
This  "John  Jones  Manufacturing  Co."  appropriation  is 
trimmed  down  to  racing  weight,  particularly  on  credit  reports. 
It  includes  only  a  sufficient  amount  to  cover  fifty  credit  reports 
over  combined  membership  service,  which  in  any  ordinary  line 
would  cover  at  least  an  export  sales  volume  of  $50,000.  If  the 
first  year's  sales  exceed  S50,000  in  the  average  branded  product, 
the  least  worry  will  be  the  cost  of  crediting  orders 

Analyzing  the  Correspondence  Items. — If  there  is  faith  in  an 
export  future  there  should  be  at  least  $250  additional  letter 
writing  expense  in  developing  more  intensively  the  territory  to  be 
covered  by  the  first  export  salesman.  This  will  be  returned  in  his 
increased  ability  to  sell  goods,  due  to  the  acquaintance  with 
his  firm's  name  by  the  dealers  he  visits,  so  that  he  will  not  be 
forced  to  devote  his  energies  to  introducing  his  brands  and  their 
maker.  One  cause  of  the  seemingly  low  cost  of  soliciting  such  a 
huge  prospective  business  will  be  seen  to  be  the  apparent  failure 
to  include  any  charge  for  the  services  of  other  department 
workers. 


ORGANIZING  FOR  EXPORTING  31 

On  socond  consideration  it  will  be  apparent  that  this  expense 
does  not  really  come  into  existence  until  actual  business  is 
secured,  and  during  the  first  year  it  should  be  charged  not  to  the 
export  end  but  to  the  departments  involved,  for  it  is  part  of  the 
education  they  should  have  possessed  years  before.  It  will 
bring  enough  new  viewpoints  of  value  in  their  domestic  work  to 
more   than   counterbalance   the   time   spent   in   the   first   year. 

Rapid  Sales  Result  from  Increased  Investment. — There 
can  be  no  quarrel  with  the  firm  that  wants  quick  results  and 
multiplies  the  "Jones  schedule"  by  fifty.  The  tabulation  is  not 
designed  to  show  a  recipe  infallible  in  amounts  or  even  propor- 
tions, but  to  present  to  the  perplexed  but  interested  non-exporter 
something  tangible  to  use  in  his  estimates. 

Just  as  the  first  year's  active  exporting  determines  its  own 
appropriation  according  to  the  selected  plan  of  action,  each  suc- 
ceeding year  brings  with  it  the  problem  of  the  wisest  methods 
to  employ  rather  than  the  question  of  the  best  ways  to  spend 
any  arbitrary  sum. 

ENLARGING  OVERSEAS  MARKETS 

An  equally  difficult  problem  is  the  correct  export  appropriation 
for  the  exporting  manufacturer  who  has  only  developed  a  fraction 
of  his  possible  markets  and  still  finds  in  the  markets  in  which  he 
has  established  business  opportunity  for  increased  sales. 

As  a  concrete  example,  the  imaginary  Eureka  Novelty  Co.  has 
been  established  for  twenty  years  and  has  exported  for  five  years. 
It  has  an  export  trade  of  $100,000,  largely  in  the  northern  Latin 
American  republics;  a  few  scattered  agents  and  agencies  in 
Europe,  and  is  now  considering  sending  its  own  salesman, 
carrying  only  its  own  lines  to  the  market  which  seems  to  offer 
the  greatest  possibilities.  Mail  solicitation,  export  advertising 
and  commission  houses'  sales  are  responsible  for  its  present 
volume  of  export  trade. 

The  salary  of  the  export  manager  need  not  be  discussed 
in  connection  with  this  export  appropriation.  It  is  a  variable 
depending  on  the  responsibilities  involved,  the  state  of  his 
development  and  the  laws  of  supply  and  demand.  It  will 
be  discussed  in  another  chapter. 

The  Export  Salesman. — The  next  item  of  the  export  appro- 
priation which  the  Eureka  must  estimate  is  the  cost  of  one 


32  EXPORT  MERCHANDISING 

salesman's  full  time  for  one  year  and  the  determination  of  what 
expenses  his  travels  will  necessitate.  It  is  the  opinion  of  those 
export  men  whose  experience  should  weigh  most  heavily  that 
until  territory  has  been  well  developed  by  a  series  of  salesmen's 
visits  no  quota,  bonus  or  commission  plan  should  be  employed. 
The  export  salesman  on  his  first  trip  through  new  or  partly 
developed  territory  should  primarily  mirror  intimately  conditions 
he  finds  and  sell  wisely  as  well  as  largely.  His  salary  should  be 
that  of  a  domestic  salesman  of  equal  ability  plus  a  small  per  cent 
to  cover  the  hardship  entailed  in  longer  trips,  and  his  vacation, 
at  least  a  full  month  out  of  each  twelve.  His  expenses  will  range 
from  $15  a  day  to  $25  or  .|30  while  on  the  ground,  which  includes 
only  a  modest  amount  of  entertainment,  a  single  trunk  of  samples 
and  hotel  accommodations  ensuring  the  comfort  to  which  he  is 
entitled. 

Price  Lists  and  Catalogs. — The  exporting  manufacturer  by  his 
fifth  year  should  have  catalogs  in  Enghsh,  Spanish  and  French 
and  at  least  a  Portuguese  price  list  of  some  sort.  Whether  the 
export  traveller  devotes  his  entire  time  to  English-speaking 
countries  or  solely  to  the  Latin  nations,  the  mail  and  solicitation 
work  should  always  operate  on  a  far  wider  scale  in  order  that  the 
firm's  name  and  leading  trade-marks  are  made  familiar  to 
buyers  in  the  world's  leading  markets.  In  dollars  and  cents  this 
will  pay  dividends  when  the  time  for  intensive  work  arrives,  and 
in   the   meantime   more   than   break   even   on   direct   business. 

There  is  no  economy  in  paying  the  lowest  price  for  translation 
work  in  catalogs,  price  lists  or  circulars.  Even  of  greater 
importance  than  correspondence  is  the  correctness  of  all  printed 
literature,  for  an  error  in  a  typewritten  letter  may  be  a  forgivable 
offense,  but  in  the  catalog  it  will  be  taken  as  typical  of 
export  methods.  Reference  need  only  be  made  to  the  classic 
"cushions  full  of  bugs"  for  "buggy-cushions"  in  one  Western 
catalog,  and  the  changing  of  a  holiday  greeting  to  a  most  offen- 
sive vulgarism  by  another  "high-school  Spanish"  translator,  in 
order  to  point  out  the  perils  of  "seeking  inside  the  force"  in 
translations.  Now  and  then  a  rare  accident  places  near  at  hand 
the  ideal  translator,  with  full  knowledge  of  the  intricacies  of 
your  line  and  of  the  language.  But  this  is  in  real  life  as  rare  as 
the  finding  of  a  diamond  in  a  thistle. 

Wise  Avoidance  of  Non-essentials. — The  wise  investments 
are  not  solitary  units  but  ones  which  add  strength  to  the  export 


■iH'  i-nrinintM— — HI 


ras 


i\  r»  n  ^  (\ 


LA  CPiSPi 
FRANCESA 


Fig.  3. — American  silverware  in  Ecuador.  This  significant  window  trim  of 
Reed  &  Barton's  line  illustrates  both  the  limitations  and  the  possibilities  of 
displays  in  Latin  America. 


ORGANIZING  FOR  EXPORTING  33 

campaign  as  a  whole.  Those  and  only  these  need  be  considered 
in  an  export  appropriation.  The  others  are  pure  speculation. 
For  if  a  maker  has  no  plans  for  Tokyo,  no  facilities  for  handling 
and  increasing  business  gained  and  no  plans  which  it  would  aid, 
the  entry  into  any  " gct-rich-quick "  scheme  in  Japan  is  "foreign" 
only  because  it  is  foreign  to  the  real  interest  of  the  company. 

It  may  come  that  an  experienced  export  manager  is  secured  in 
the  second  year  of  foreign  trading.  In  the  second  or  third  year 
export  advertising  will  usually  be  found  advisable.  Export 
price  lists  in  several  languages  or  even  catalogs  of  merit  may  well 
be  a  noted  addition  in  the  fourth  or  fifth  year.  Between  the 
first  and  sixth  year  in  many  lines  will  be  formed  the  year  in 
and  year  out  use  of  at  least  one  export  salesman. 

A  TYPICAL  SIXTH  YEAR'S  APPROPRIATION 

The  Eureka  Novelty  Co. 

Sixth  Year's  Export  Appropriation 

Export  Manager %  5 ,  000 

Export  Salesman  (Salary) 4,000 

Export  Salesman  (Expenses) 6,000 

Export  Advertising 1 ,  500 

Export  Literature,  including  all  printed  matter 3,000 

Samples 2 ,  000 

Correspondence,  including  Translations 3,250 

Export  Organization  Memberships 250 

Credit  Reports,  Lists,  etc 800 

Miscellaneous,  including  Entertainment,  Attendance 

at  Export  Conferences,  etc 1 ,000 

$26 , 800 
Expected  Sales  Volume $250,000-1300,000 

These  figures  closely  approximate  the  actual  expense  of  an 
Ohio  exporting  manufacturer.  But  as  contrasts,  the  export 
sales  expense  of  a  Pennsylvania  manufacturer  is  only  6  per  cent 
of  his  total  export  sales,  while  another  exporter  thinks  his  55 
per  cent  only  a  little  high.  Both  agree  that  the  Eureka  appro- 
priation is  rather  liberal,  based  on  the  expected  sales  volume, 
and  both  agree  that  it  is  sound  for  a  firm  which  is  adding  a  real 
export  manager  and  a  year-round  export  salesman. 

The  Small  Export  Appropriation. — "Can  profitable  export 
sales  be  started  with  a  small  export  appropriation?"  is  a 
question  frequently  asked.     It  is  a  matter  of  record   that   a 

3 


34  EXPORT  MERCHANDISING 

inanufactiirer  of  velours  was  started  on  his  sucoossful  quest  for 
export  profits  by  an  expenditure  of  $25.  The  following  letter 
and  reply  is  reproduced  by  courtesy  of  "The  World's  Work," 
and  illustrates  the  possibilities  of  the  small  export  appropriation: 

Can  a  Start  Be  Made  with  Five  Hundred  Dollars? — "I  am 
the  sales  manager  for  a  manufacturer  of  vacuum  cleaners,  and 
have  for  some  time  been  endeavoring  to  interest  my  firm  in 
export  trade.  I  have  been  able  to  secure  an  appropriation  of 
$500,  and  as  this  is  only  a  fraction  of  what  I  have  been  told  is 
necessary  to  make  any  start,  I  would  appreciate  your  advising 
whether  I  had  better  let  the  matter  drop  until  I  can  secure  a 
larger  appropriation  or  go  ahead.  If  you  recommend  trying  to 
do  something  with  the  small  sum  which  has  been  set  as  a  limit, 
what  would  you  suggest? 

"We  make  a  complete  line  of  vacuum  sweepers,  including 
those  operated  by  hand,  water  and  electric  power,  and  ranging  in 
retail  price  from  $5  to  $500." 

It  is  interesting  to  note  that  the  reply  is  positive  and  specific 
and  answers  the  question  of  the  small  appropriation  in  a  way  to 
give  confidence  to  manufacturers  willing  to  spend  from  a  few 
hundred  to  a  few  thousand  dollars  in  a  first  year's  export 
experiment. 

How  to  Divide  the  Modest  Export  Budget. — ^"It  is  entirely 
possible  to  use  a  $500  appropriation  as  a  means  to  secure  larger 
future  appropriations  by  showing  how  much  can  be  done  with  a 
comparatively  small  sum.  There  is  scarcely  a  line  which  will 
not  show  some  results  on  a  $500  appropriation  if  it  is  destined 
to  be  in  demand  in  foreign  markets. 

"The  amount  involved  is  rather  small  to  include  membership 
in  the  export  organizations  which  you  will  certainly  need  later  on, 
and  consequently  you  should  secure  from  the  Bureau  of  Foreign 
and  Domestic  Commerce  and  Pan  American  Union,  both  of 
Washington,  D.  C,  not  only  lists  of  prospective  trade  customers, 
but  also  copies  of  their  publications  bearing  on  trade  conditions 
and  exporting  in  general.  They  will  be  glad  to  advise  you  the 
names  of  the  few  but  important  books  on  exporting  which  will  be 
of  value  to  you  and  which  should  certainly  be  purchased  and 
read  before  any  serious  effort  is  made  toward  sales  solicitation. 

The  Use  of  Foreign  Freight  Forwarders. — "So  that  costly 
blunders  may  be  avoided  in  connection  with  shipping  and  in 
general  port  of  entrj^  and  port  of  departure  procedure,  we  suggest 


ORGAN  I  ZING  FOR  EXPORTING  35 

that  it  would  be  economy  for  you  at  tlic  start  to  get  in  touch  with 
some  hirgo  firm  of  forwarders  who  for  a  small  fee  (usually  $3  to 
$10  per  shipment)  will  take  all  details  off  your  hands,  and  be 
given  instructions  in  regard  to  the  necessary  invoicing,  which, 
of  course,  must  remain  as  your  duty.  This  expert  assistance  is 
cheaply  bought  until  your  volume  of  business  reaches  such  a 
state  that  you  feel  it  economy  to  handle  all  details  yourself. 
In  justice  to  the  forwarders,  it  may  be  said  that  many  firms  prefer 
their  services  regardless  of  the  total  export  trade  they  ultimately 
secure. 

"Your  appropriation  is  altogether  too  small  to  consider  the 
salaried  services  of  a  salesman,  whether  of  the  direct  exclusive 
or  combination  type,  and  too  small  to  do  any  substantial  amount 
of  work  among  consumers  to  force  dealers  to  stock  your  line. 
It  is  also  too  small  to  permit  effective  display  advertising  in  any 
foreign  medium,  which  form  of  sales  endeavor  should  accompany 
and  not  be  the  sole  merchandising  force  in  the  great  majority  of 
cases. 

"As  this  eliminates  every  standard  form  of  merchandising 
with  the  exception  of  correspondence,  it  becomes  clear  that  our 
recommendation  must  be  based  on  an  "all  by  mail"  campaign 
founded  on  the  familiar  series  idea. 

How  Letters  Bring  Sales. — "Supplementing  this  series  of 
letters,  and  used  independently  of  it,  we  suggest  you  endeavor  to 
excite  the  dealer's  interest  and  secure  his  cooperation  by  offering 
to  aid  in  creating  consumer  demand  in  case  he  would  give  names 
of  a  hundred  possible  buyers  in  his  city.  These  names  will  form 
the  basis  of  another  "all  by  mail"  group.  This  type  of  sales- 
promotion  work  should  be  adopted  only  when  it  is  impossible 
to  secure  a  representative  in  an  important  city  without  doing 
this  in  advance  of  orders,  and  is  more  commonly  used  to  induce  a 
dealer  to  order  and  cooperate  by  following  up  in  person  a  mail 
attack  on  the  possible  customers  whose  names  he  sells. 

Concentration  Possibilities. — ^"It  is  useless  to  try  to  make  a 
definite  rule  in  regard  to  whether  or  not  a  small  appropriation 
should  be  scattered  like  seeds  to  the  four  winds  of  heaven  or 
planted  in  a  forcing  frame  in  a  single  effort  under  intensive 
conditions.  The  sales  manager  who  calls  all  cowards  who  arc 
unwilling  "to  put  it  to  the  touch  and  win  or  lose  it  all,"  can  hardly 
be  expected  to  agree  with  the  sales  manager  who  believes  in 
getting  every  drop  of  juice  out  of  a  small  unit  and  playing  safe 


36  EXPORT  MERCHANDISING 

every  minute  of  the  time.  We,  therefore,  recommend  that  each 
use  the  pecuhar  capabihties  with  which  he  is  gifted  in  seeking 
to  spend  wisely  his  export  appropiiation,  just  as  he  would  a 
domestic  appropriation  of  similar  size. 

"With  $500  we  incline  strongly  toward  the  forcing  frame 
method,  and  this  despite  the  experience  of  an  exporter  whose  first 
effort  toward  foreign  sales  was  the  thinnest  of  spreading  of  his 
literature  over  the  greater  part  of  the  civilized  world,  and  whose 
reward  was  three  accounts  which  alone  would  total  well  over 
four  figures. 

A  "Five-letter"  Series. — "Five  hundred  dollars  will  cover  the 
entire  cost  of  a  five-letter  series  with  attractive  enclosures,  the 
cost  of  following  up  inquiries  which  develop  and  modest  two- 
fold two-color  price  lists  in  Spanish  and  English.  Based  on  a 
careful  selection  of  500  possible  buyers,  and  not  including  cost  of 
credit  reports  on  firms  ordering  (for  these  come  after  the  effort 
and  hence  are  not  part  of  an  'introductory  test')  $500  furnishes 
the  means  to  determine,  not  whether  the  line  is  exportable,  but 
whether  it  can  be  sold  profitably  by  mail  endeavor  alone. 

"A  dismal  failure  from  the  dollar  and  cent  standpoint  of  such 
an  'all  by  mail '  effort  may  show  clearly  that  with  the  additional 
expense  of  a  salesman  to  close  business  interested  by  corre- 
spondence the  line  can  be  made  to  pay  most  pleasing  dividends. 
A  maker  of  power  boats  expended  $2,000  on  mail  work  without 
securing  a  single  direct  order,  but  developed  'leads'  which 
when  followed  up  by  a  personal  representative  has  led  to  a  series 
of  agencies  whose  average  yearly  purchases  is  far  in  excess  of 
domestic  agents. 

Probable  Profit  from  Permanent  Relations. — "It  cannot  be 
emphasized  too  strongly  that  a  line  which  runs  into  money 
rapidly,  such  as  vacuum  cleaners  ranging  from  $5  to  $500  for 
each  item,  is  seldom  sold  without  an  exchange  of  correspondence 
beyond  the  series  and  the  first  reply.  It  is  mighty  poor  business 
arithmetic  to  treat  an  inquiry  as  though  it  represented  only  $1 
(based  on  500  firms  solicited  for  a  total  cost  of  $500),  for  the 
inquiry  must  be  assumed  to  be  of  the  importance  of  the  probable 
profit  arising  from  a  permanent  business  relation  with  the  inquirer. 

"As  a  result  of  a  'thousand  prospect'  circularization  in  1902 
one  Chicago  firm  secured  thirty  trial  orders  amounting  to  less 
than  a  thousand  dollars.  One  of  these  from  Cape  Town  is  now 
on  an  agency  basis  and  carrying  a  stock  worth  $30,000,  and 


ORGANIZING  FOR  EXPORTING  37 

yielding  a  yearly  profit  of  $10,000.  The  history  of  that  case  is 
worth  brief  analysis.  The  line  was  toilet  goods  and  light  fixtures 
and  it  required  two  years  to  land  the  first  order,  for  the  South 
African  firm  was  prepared  to  go  into  the  game  heavily  or  not  at 
all.  The  initial  order  was  comparatively  small  and  the  sales 
helps  which  went  with  it  more  than  represented  the  profit 
margin.  The  second  order  was  over  $2,750,  while  the  third 
order  was  a  stock  order  based  on  a  ten-year  contract  which,  in 
exchange  for  exclusive  territorial  rights,  guaranteed  purchases 
increasing  with  each  year  of  the  contract. 

Definite  Recommendations. — "To  sum  up  the  possibilities 
of  $500  experimental  export  appropriation  for  vacuum  cleaners. 

1.  Employ  it  in  mail  efforts 

2.  Build  up  a  letter  series 

3.  Treat  each  inquiry  received  according  to  its  potentialities. 

Even  if  on  its  indications  the  result  is  so  unfavorable  as  to 
preclude  further  efforts  it  is  not  a  business  loss,  for  every  business 
must  expect  to  spend  money  to  learn  where  not  to  spend  more! 

"It  is  pleasing  to  add  that  the  appropriation  was  increased 
to  $1,000,  and  that  the  satisfactory  results  from  this  investment 
have  led  to  the  establishment  of  a  definite  policy  of  exporting. 
Domestic  demand,  which  hampered  normal  handling  of  exports, 
was  responsible  for  limiting  overseas  sales.  Several  excellent 
agents  have  been  secured  and  sales  quickly  proved  a  profitable 
market  within  easy  reach." 

There  are  many  enterprises  of  such  great  financial  resources 
that  when  they  make  their  decision  to  export,  their  first  thought 
is  to  build  volume  in  the  shortest  possible  period  of  time.  No 
sane  manufacturer  expects  to  secure  world-wide  distribution  in  a 
year.  Even  those  to  whom  time  is  more  important  than  the 
size  of  initial  investment  have  been  forced  to  rest  content  with 
partial  distribution,  in  spite  of  their  determination  to  participate 
in  export  profits  on  the  widest  scale  in  a  twelve-month. 

The  Unlimited  Appropriation. — Take  the  case  of  a  middle- 
western  jewelry  house,  backed  by  unlimited  capital,  as  regards 
the  nature  of  their  product.  Through  their  domestic  affiliations 
they  literally  borrowed  the  export  manager  of  an  eastern  manu- 
facturer in  a  similar  line,  paid  him  $3,000  a  month  for  the  six 
months  in  which  he  organized  their  export  department,  expended 
imder  his  direction  over  a  quarter  of  a  million  dollars  in  the  first 
year,  and  yet  could  only  claim  adequate  representation  and  sales 


38  EXPORT  MERCHANDISING 

volume  in  six  countries  as  a  result.  At  the  end  of  three  years, 
world  wide  representation  was  far  from  fact.  However,  the 
handsome  profits  on  the  sales  which  had  been  made  had  more 
than  covered  the  initial  investment. 

The  personnel  of  the  separate  export  department  may  be 
a  single  man  or  a  multitude  of  executives  and  clerks.  Many 
enterprises  which  are  unfamiliar  with  the  possibilities  of  the 
"built-in"  export  department  hold  a  single  man  responsible 
for  all  export  activities  of  sales,  shipping,  credits,  collections  and 
records,  and  responsible  for  instructions  and  supervision  of  the 
details  of  invoicing  and  packing.  Other  enterprises  go  to  the 
other  extreme  and  actually  have  more  export  executives  (though 
seldom  on  the  same  salary  level)  than  are  used  in  their  domestic 
activities.  The  growth  of  export  sales  in  many  industries  since 
1900  has  overwhelmed  manufacturers  dependent  on  the  separate 
export  department  and  has  led  to  radically  wrong  enlargements — 
enlargements  easily  avoidable  had  the  original  export  planning 
been  sound. 

Organizing  the  Inside  Force. — There  are  two  leading  types  of 
the  separate  export  department.  The  first  is  based  upon  division 
by  duties;  the  second  is  based  largely  upon  divisions  by  terri- 
tories. The  separate  export  department  of  a  large  California 
manufacturer  is  an  excellent  example  of  the  division  by  duties. 
Its  personnel  includes: 

Executive  Control — The  President. 

The  Export  Manager 

Assistant  Export  Manager 

Export  Advertising  Manager 

Sales  Promotion  Manager 

Sales  Correspondents  (4) 

Pricing  Clerks  (2) 

Record  Clerks  (2) 

Entry  Clerks  (2) 

Bill  Clerks  (4) 

Stenographers  (12) 

Foreign  Credit  and  Collection  Manager 

Credit  and  Collection  Clerks  (2) 

Export  Traffic  Manager 

Assistant  Export  Traffic  Manager 

Export  Traffic  Clerks  (2) 

Export  Shipping  Head 

Export  Packers  {'o) 

Export  Chemist 

Chemist's  Assistant 


ORGANIZING  FOR  EXPORTING  39 

Territorial  Responsibilities. — In  Illinois  tlicr(3  is  an  excellent 
example  of  the  separate  export  department  based  upon  the 
theory  of  territorial  division.     Its  personnel  includes: 

Executive  Control — First  Vice-President. 

The  Export  Manager 

Export  Sales  Manager 

Assistant  Export  Sales  Manager — Latin  America 

Assistant   Export  Sales  Manager — Europe,   except  British   Isles  and 

Near  East 
Assistant  Export  Sales  Manager — Near  East 
Assistant  Export  Sales  Manager — Balance  of  Africa;  Hawaii 
Assistant  Export  Sales  Manager — Far  East,  except  China  and  Japan 
Assistant  Export  Sales  Manager — China  and  .Japan 
Assistant  Export  Manager — Canada,  Newfoundland  and  Alaska 
Export  Credit  Manager 
Export  Collection  Manager 
Export  Advertising  Manager 
Export  Traffic  Manager 
Export  Office  Manager 

In  this  enterprise  all  orders,  billing,  stenographers  and  records 
are  in  charge  of  the  export  office  manager  who  has  a  staff  of  twenty 
clerks.  The  traffic  manager,  with  his  staff  of  twenty-eight,  handles 
export  packing,  insurance  and  forwarding.  The  export  credit 
manager  has  charge  of  both  credits  and  finance.  The  export 
advertising  manager  and  the  export  sales  manager  have  joint  duties 
in  export  sales  promotion  work. 

Organizing  the  Separate  Export  Department. — It  is  obvious 
that  these  two  examples  illustrate  the  personnel  of  large  manu- 
facturing exporters.  The  needs  of  exporters  whose  sales  run 
into  hundreds  of  thousands  of  dollars  rather  than  into  many 
millions  are  naturally  less.  A  typical  separate  export  depart- 
ment for  a  manufacturer  whose  sales  are  less  than  half  a  million 
on  branded  merchandise  will  show  a  distinct  leaning  toward  the 
"built-in"  idea. 

Export  Manager 
Assistant  Export  Manager 
Clerks  (4) 
Stenographers  (2) 

In  such  an  organization  it  will  be  found  that  credits  are  either 
passed  upon  by  the  export  manager  or  by  the  domestic  credit 
man — a  condition  that  applies  also  to  collections,  advertising 
and  forwarding. 


CHAPTER  V 
THE  EXPORT  DEPARTMENT 

"The  highly  specialized  attention  today  given  by  American 
manufacturers  to  their  export  departments  is  the  most  compelling 
evidence  of  the  permanence  of  America's  export  trade." 

— B.  B.  Jackson. 

The  Importance  of  the  Export  Department.  Division  by  Nature  of  Sales. 
By  Territories.  By  Types  of  Activities.  Analysis  of  Export  Depaitment  of 
the  Miller  Rubber  Company.  Formula  for  the  Organization  of  the  Small 
Export  Department.  European  Export  Departments.  System  of  Advance- 
ment in  Europe  and  the  United  States  Contrasted.  Examples  of  the  Workings 
of  the  Conference  Export  Department. 

Each  year  brings  a  growing  recognition  among  American 
manufacturers  of  the  organization  side  of  exporting.  The 
Export  Department  each  year  becomes  more  truly  a  department 
and  less  an  individual.  It  is  now  common  practice  for  the 
Export  Department  to  interest  itself  in  other  phases  of  mer- 
chandising beyond  the  boundary  of  sales.  Regardless  of  the 
type  of  export  department  which  a  manufacturer  may  select, 
there  is  the  constant  contact  of  advertising,  credits,  collections, 
records,  packing,  manufacturing  and  shipping  which  inevitably 
lead  the  Export  Department  into  broad  fields. 

How  Export  Departments  Are  Divided. — With  the  expansion 
of  the  Export  Department  so  that  it  becomes  a  matter  of  more 
than  an  export  sales  manager  and  his  clerks,  three  lines  of  or- 
ganization are  opened.  One  line  continues  along  the  broad  road 
of  sales  with  divisional  managers  in  charge  of  sales  activities  in 
certain  territories.  A  second  expansion  lays  stress  upon  division 
by  products  rather  than  division  by  territory.  The  third  and 
most  important  recent  development  lies  in  an  expansion  of 
types  of  activities. 

THE  MILLER  RUBBER  COMPANY  METHOD 

An  excellent  example  of  the  growth  of  an  export  department 
along  lines  of  territorial  divisions  is  supphed  by  the  Miller 
Rubber  Co.     Its  headquarters  at  Akron  place  its  export  manager 

40 


THE  EXPORT  DEPARTMENT  41 

at  the  head  of  its  export  department,  aided  by  an  assistant 
export  manager  and  three  (Hvisional  managers.  One  of  these 
divisional  managers  is  in  charge  of  all  Latin  America,  the  West 
Indies,  Spain,  Portugal  and  the  Philippine  Islands.  Another  is 
in  charge  of  all  Europe  except  Spain  and  Portugal,  Africa  north 
of  the  Equator,  Asia  Minor,  Mesopotamia,  Syria  and  Persia. 
The  third  is  in  charge  of  China,  Japan,  India,  Straits  Settlements, 
Federated  Malay  States,  Australia,  New  Zealand,  Dutch  East 
Indies,  British  East  Indies,  Ceylon,  Siam,  Tasmania,  Hawaiian 
Islands,  Southern  Pacific  Islands,  and  Africa  south  of  the  Equator. 

In  addition  to  these  purely  sales  divisions  the  Export  Depart- 
ment also  maintains  a  Research  Department  which  is  in  charge 
of  sales  records,  statistics,  clippings  and  analysis,  and  the  Order- 
Shipping  Department,  to  which  is  delegated  the  preparation  of 
all  export  orders  so  that  they  can  be  correctly  and  conveniently 
handled  by  the  major  departments  of  the  parent  business,  such 
as  the  Order  Department,  the  Billing  Department,  the  Traffic 
Department.  This  department  is  also  charged  with  the  forward- 
ing of  all  shipping  documents.  Attached  to  the  staff  of  the 
Sales  Department  is  a  special  cable  clerk  and  a  force  at  the  New 
York  office  which  cares  for  export  shipments  from  Atlantic 
ports,  inquiries  from  export  commission  houses  and  the  enter- 
tainment of  visiting  foreign  buyers  while  in  New  York. 

Departmental  Contacts. — Through  the  Export  Department, 
contacts  have  been  estabhshed  with  the  domestic  Order,  Traffic, 
Shipping,  Billing,  Credit,  Bookkeeping  and  File  Departments. 
In  the  advertising  department  there  is  a  separate  division  called 
the  Overseas  Advertising  Department. 

Technically,  the  Miller  Rubber  Co.  at  this  stage  of  its 
organization  exemplifies  a  combination  of  the  separate  Export 
Department  with  territorial  division  heads  and  specialists, 
coupled  with  the  "built-in"  export  departmental  idea. 

Division  by  Products. — In  enterprises  which  manufacture  a 
wide  range  of  products,  particularly  when  these  products  are 
technical  or  semi-technical  in  nature,  the  modern  tendency  is 
distinctly  towards  division  by  products  rather  than  division  by 
territories.  In  such  an  organization  will  be  found  an  executive 
bearing  the  title  Manager  Export  Department  at  the  head.  His 
immediate  staff  will  include  an  export  sales  manager,  with  asso- 
ciates or  assistants  to  whom  report  divisional  export  sales  mana- 
gers, to  whom  are  entrusted  the  selling  throughout  the  world  of 


42  EXPORT  MERCHANDISING 

llio  products  of  theii-  (llvisions.  In  the  larger  oi-gaiiizations  of 
this  ty])e  will  be  found  also  a  staff  which  will  inchide  Order  and 
Entr}^  Clerks,  Statistical  and  Tabulating  Clerks,  and  a  separate 
division  for  Sales  Correspondents.  Again,  in  noting  modern 
tendencies,  stress  should  be  placed  on  the  Correspondence 
Department,  which  is  a  unit  in  itself  capable,  under  direction 
and  supervision,  of  handling  all  outgoing  sales  correspondence, 
I'cgardless  of  divisional  departments  or  languages  employed. 

Methods  of  the  Separate  Department. — In  this  separate  type 
of  department  the  export  manager,  through  his  assistants  and 
associate  managers,  maintains  contacts  with  the  major  divisions 
of  the  parent  organization.  In  such  an  organization  the  manager 
of  the  Export  Department  prepares  the  budget  and  apportions 
to  each  division  under  his  control  a  share  of  the  annual  appropria- 
tion, and  alone  decides  upon  the  character  and  volume  of  export 
advertising  and  sales  promotion  work.  It  is  through  him  and  his 
associates  that  the  divisional  managers  are  linked  up  with  the 
business  as  a  whole.  It  is  improbable  that  the  immediate  future 
will  bring  with  it  a  trend  towards  the  wholly  separate  Export 
Department  which,  apart  from  manufacturing,  functions  as  an 
entity  separate  from  the  parent  company.  Indeed,  it  is  improb- 
able that  separate  export  sales  companies  will  receive  in  the 
future  the  serious  consideration  of  any  but  the  most  gigantic 
corporations.  The  separate  export  department  is  based  upon 
the  conception  that  exporting  differs  so  radically  from  domestic 
merchandising  that  it  must  be  handled  solely  by  export  experts. 
The  true  separate  export  department  is  in  charge  of  its  own 
credits,  collections,  advertising  and  shipping,  as  well  as  the 
various  minor  activities  inherent  in  its  work. 

Inter-departmental  Divisions. — The  separate  export  depart- 
ment bases  its  justification  on  the  potential  or  actual  export 
sales  volume  and  its  inferred  or  actual  need  of  the  full  time  of 
high-brain-powered  executives  in  every  sphere  of  merchandising. 
It  is  a  thing  apart  from  its  parent  company  except  possibly  in  its 
location,  and  its  one  point  of  contact — its  manager — with  the 
management  of  the  parent  business.  In  one  of  the  outstanding 
examples  of  this  type  of  organization  the  titles  of  the  executive 
staff  include  manager,  export  manager,  export  sales  manager, 
export  credit  manager,  export  advertising  manager,  export 
collection  head,  export  traffic  manager,  export  files  head,  chief 
export  correspondent,  export  billing  head  and  export  records 


THE  EXPORT  DEPARTMENT  43 

head.  Each  department  within  the  Export  Department  has  its 
own  clerical  and  stenographic  force.  Each  department  reports 
directly  to  the  manager  in  charge  of  the  Export  Department. 

Responsibilities  in  the  Small  Export  Department. — One  of  the 
most  compelling  demands  of  today  is  a  formula  for  the  organiza- 
tion of  the  small  Export  Department.  One  of  the  best  examples 
of  the  successful  small  department  is  based  on  an  export  manager, 
assistant  export  manager  and  the  export  clerical  staff.  In  this 
organization  the  export  manager  is  responsible  for  the  initiative 
in  export  selling;  discipline  of  the  department  and  the  coordina- 
tion of  its  activities  with  the  business  as  a  whole.  The  assistant 
export  manager  is  in  charge  of  the  execution  of  export  policies, 
export  technique,  supervision  of  export  correspondence  and 
clerical  work.  The  clerical  staff  consists  of  a  combined  order 
and  entry  clerk,  two  export  sales  correspondents  and  a  statistical 
and  general  clerk.  The  success  of  this  type  of  department  obvi- 
ously depends  upon  the  calibre  of  the  export  manager  and  his 
immediate  associates.  In  the  scores  of  examples  which  parallel 
the  success  of  this  particular  organization  the  profits  from  export 
selling  can  be  clearly  credited  to  the  sales  ability  of  the  export 
manager  and  the  accuracy  and  intelligence  of  the  execution 
of  the  export  manager's  sales  ideas  by  the  balance  of  his 
force. 

The  One-executive  Department.  —In  even  smaller  units  the 
Export  Department  will  be  found  to  consist  of  an  export  manager, 
with  a  staff  of  from  one  to  a  dozen  clerks.  In  organizations  of 
this  type  the  export  manager  is  responsible  not  only  for  the 
initiative  in  export  selling,  but  also  for  the  direct  supervision  of 
the  execution  of  his  sales  ideas.  He  is  also  responsible  for  the 
education  of  his  clerical  staff  to  the  importance  of  their  work  and 
to  the  assumption  of  duties  beyond  those  of  the  average  clerk. 
While  it  seems  absurd  to  dignify  such  a  type  of  organization 
as  an  Export  Department,  there  are,  nevertheless,  examples 
with  individual  export  sales  totals  running  over  the  million- 
dollar  mark  in  branded  lines  of  merchandising  which  require 
sales'  skill  rather  than  price  inducement,  and  which  demand 
development  of  sales  in  many  countries. 

Some  of  the  leading  export  executives  of  today  have  reached 
their  present  prominence  while  remaining  in  charge  of  export 
departments  in  which  they  are  the  only  executive.  They  have 
been  able  to  attain,  through  their  ability  to  educate  others;  while 


44  EXPORT  M EEC  11  AN DI SING 

they  personally  built  up,  on  a  remarkably  firm  foundation, 
staggering  sales  totals  at  a  minimum  of  sales  expense.  While  in 
European  countries  export  departments  are  usually  developed 
along  the  lines  of  specialization,  the  inherent  weakness  of  this 
system  was  early  discovered  in  this  country. 

American  and  European  Methods  Contrasted. — Twenty 
years  ago  our  export  departments  were  modelled  along  European 
lines,  with  the  result  that  there  was  little  broad  development 
within  the  Export  Department.  The  cable  clerk  remained  a 
cable  clerk;  the  statistical  and  analysis  clerk  remained  a  statis- 
tical and  analysis  clerk.  Experience  proved  that  a  system  which 
did  not  provide  for  promotion  in  nature  of  duties  as  well  as  in 
compensation,  failed  to  attract  and  hold  the  most  desirable  type 
of  employees.  As  a  direct  consequence,  American  development 
in  export  departments  has  produced  a  system  which  permits  of 
the  rapid  development  of  the  individual  without  wastage  of  brain 
power,  and  the  attracting  to  export  departments  of  men  of  a 
calibre  far  superior  to  the  type  which  could  be  attracted  to  the 
"one  job  in  a  lifetime"  system. 

By  this  marked  difference  in  systems  the  United  States 
today  is  developing  potential  export  managers  of  unusual 
balance  and  sense  of  proportion.  The  mere  technician  is  so 
rare  as  to  be  almost  extinct  in  direct  exporting.  The  modern 
export  manager  who  has  risen  from  the  ranks  brings  to  his  posi- 
tion not  only  a  knowledge  of  invoicing  or  of  shipping,  but  the 
well-rounded  knowledge  which  enables  him  to  develop  an 
organization. 

The  Committee  or  Conference  Export  Department. — Almost 
unheralded,  there  has  come  into  being  in  the  United  States  a  form 
of  control  of  export  executives  which  is  unknown  in  any  other 
country.  Indeed,  it  is  still  unknown  to  many  of  the  most  careful 
students  of  exporting  in  this  country.  For  lack  of  an  established 
designation,  it  can  be  called,  without  fear  of  contradiction,  a 
conference  export  department.  While  this  type  of  department  is 
in  many  ways  closely  akin  to  the  "built-in"  export  department, 
which  is  described  elsewhere  in  this  volume,  fundamentally  it  is 
decidedly  different.  It  will  be  noted  that  usually  the  export 
executives  radiate  from  the  export  manager  and  the  member  of 
the  management  whose  duties  include  the  control  of  export  sales. 
In  the  conference  export  department  an  uncommon  plan  of 
government  obtains,  so  that  there  is  not  the  connecting  link 


THE  EXPORT  DEPARTMENT  45 

between  the  export  sales  manager  and  the  parent  enterprise  in  the 
form  of  a  management  member  in  control  of  export  executives. 

The  conference  export  department  places  the  officials  of 
the  company  under  all  normal  circumstances  on  a  par  with  the 
export  manager,  the  sales  manager,  the  advertising  manager, 
the  credit  manager,  the  collection  manager,  records  chief,  traffic 
manager,  production  manager  and  factory  superintendent. 
The  conference  export  department  is  based  squarely  upon  the 
belief  that  there  is  nothing  so  mysterious  about  exporting  that 
it  should  be  left  as  a  thing  apart  in  the  conduct  of  a  managing 
enterprise.  This  form  of  organization  came  into  being  during 
the  War,  when  the  acute  export  problems  demanded  conference 
between  the  heads  of  the  various  departments  of  several  of  our 
most  progressive  manufacturing  corporations.  During  these 
conferences  it  was  found  almost  invariably  that  export  problems 
had  radii  reaching  into  every  department  of  the  enterprise.  It 
was  found  also  that  the  broad  business  knowledge  of  each 
department  head  contributed  materially  to  the  building  up  of  the 
most  successful  type  of  export  service,  and  that  even  the  export 
sales  campaign  gained  in  strength  through  the  cooperation  at  the 
conference  table  of  representatives  of  each  major  division  of 
manufacturing  and  selling. 

Possibilities  of  Conference  Control. — The  conference  export 
department  functions  exactly  as  the  common  type  of  govern- 
ment. The  export  problems  of  any  department  become  the 
problems  of  the  conference  export  department.  This  by  no 
means  should  be  taken  to  indicate  that  the  export  manager, 
the  sales  manager  and  the  advertising  manager  require  this  form 
of  control  for  their  triangular  conferences,  or  that  the  export 
manager  and  the  credit  manager  meet  only  in  the  conference 
board.  The  conference  export  department  thrives  through  these 
more  frequent  and  smaller  conferences,  just  as  the  built-in 
export  department  gains  its  full  strength  through  frequent  small 
conferences. 

The  greatest  proof  of  the  worth  of  the  conference  export 
department  lies  in  the  wonderfully  balanced  action  on  problems 
which  involve  the  business  as  a  whole,  and  each  department  to  a 
greater  or  less  degree.  While  this  type  of  management  of 
export  endeavor  is  still  far  too  young  to  lay  down  positive  rules 
governing  the  frequency  of  the  meetings  of  the  entire  conference 
board,  it  is  entirely  probable  that  the  point  of  efficiency  lies 


46  EXPORT  MERCHANDISING 

soiiicwhoro  botwccii  weekly  boiird  coiifcroiicos  and  monthly 
hoard  conferences. 

The  limited  experience  available  for  anal3\sis  points  to  the 
possibility  of  these  conferences  being  held  bi-weekly  and,  where 
other  general  conferences  do  not  conflict,  these  Board  Confer- 
ences should  be  held  during  business  hours  and  in  the  middle  of 
the  week.  It  has  been  found  that  the  chairman  of  the  conference 
board  should  be  either  the  general  sales  manager,  if  in  direct 
charge  of  export  selling,  or  the  manager  of  the  export  depart- 
ment, in  case  there  is  a  clear  defining  line  between  foreign  and 
domestic  sales  departments.  This  places  in  the  chair  the  execu- 
tive whose  interest  in  and  knowledge  of  export  problems  is  most 
far-reaching,  and  whose  contact  with  other  department  heads  is 
necessarily  the  most  frequent  and  intimate.  The  difficulty  of 
securing  prompt  action  where  responsibility  rests  with  a  confer- 
ence committee  is  recognized  as  the  greatest  draw  back  of  this 
type  of  export  organization. 

The  Future  of  the  Conference  Method. — It  is  pointed  out 
with  truth  that  the  conference  export  department  is  still  largely 
an  unproved  development  of  the  "built-in"  export  department, 
and  that  its  seeming  difference  in  control  of  export  executives  is 
largely  a  matter  of  charting  rather  than  an  essential  difference. 
With  increased  experimentation  in  control  through  a  conference 
board,  it  is  entirely  probable  that  the  conference  export  depart- 
ment may  become  an  adjunct  to  the  well-organized  built-in 
export  department,  and  it  is  entirely  probable  that  in  certain 
industries  the  built-in  export  department  will  yield  to  the  newer 
form  and  the  conference  export  department  will  be  the  ultimate 
type. 


CHAPTER  VI 
THE  LOCATION  OF  THE  EXPORT  DEPARTMENT 

"The  one  right  place  for  the  export  manager. to  make  his  liead- 
quarters  is  the  place  in  which  he  will  make  the  greatest  profit  for 
his  enterprise!" — Edmands  Woodbridge  Sanger. 

Importance  of  Correct  Location  of  Export  Department  noni  Accepted.  List 
of  Advantages  of  Seaboard  Location.  Admitted  Advantages  of  Export  Head- 
quarters at  Factory.  Examples  of  Profit  Arising  from  Seaboard  Location. 
Use  of  Seaboard  Location  in  Abnormal  Times.  Personal  Advantages  of 
Export  Manager  Located  at  Factory. 

The  importance  of  the  correct  location  of  the  export  manager 
has  been  recognized  for  decades.  It  will  aid  in  making  the 
decision  to  study  the  relative  advantages  and  disadvantages  of 
seaboard  and  factory  locations.  It  will  be  noted  that  the  nature 
of  the  product  and  the  policy  of  export  distribution  enter  largely 
into  this  problem.  The  solution  of  the  problem  of  the  correct 
location  of  the  export  manager  is  a  matter  of  decided  moment 
and  worthy  of  careful  study  by  the  management  of  the  actual  oi' 
prospective  manufacturing  exporter. 

The  Factor  of  Growth  of  Export  Sales. — Each  year  almost  as 
many  export  managers  retin-n  from  seaboard  cities  to  make  their 
head(}uarters  at  their  factories  as  there  are  export  managers  who 
leave  their  factory  offices  to  make  their  headquarters  at  the  sea- 
board. Strangely  enough,  the  reason  most  commonly  given  is 
identical  in  both  cases — the  growth  of  the  export  business  of 
the  enterprise  involved. 

This  question  has  been  raised  at  man^^  export  conferences. 
It  should  be  decided  by  facts — not  by  surmises. 

ADVANTAGES  OF  SEABOARD  LOCATION 

First  of  all  should  be  listed  the  advantages  of  location  at 
seaboard.     These  include  possibilities  of: 

1.  Closer  contact  with  export  commission  houses 

2.  Sales  to  visiting  huj^ers 

3.  Personal  contact  with  leading  export  managers 

4.  Close-at-hand  sources  of  export  information 

47 


48  EXPORT  MERCHANDISING 

5.  Better  opportunities  to  secure  ocean  freight-space 

6.  Active  participation  in  many  export  organizations 

7.  More  frequent  voluntary  suggestions  for  agents  and  customers 

8.  Securing  better-trained  export  assistants  and  clerks 

9.  Daily  conferences  with  experienced  exporters,  on  abnormal  conditions 

10.  Greater  certainty  of  "Documents  on  same  steamer  as  goods" 

11.  Last-moment  correction  of  errors  in  shipments 

12.  Time-saving  in  correspondence  and  translations 

13.  Social  entertainment  of  customers 

14.  Fullest  use  of  service  of  export  publications  and  organizations 

15.  Hearing  and  questioning  the  widest  range  of  export  authorities. 

Additional  and  Incidental  Advantages. — To  these  fifteen 
assumed  advantages,  at  least  fifteen  more  could  be  added.  These 
other  minor  advantages  include:  Prompt  and  fairly  commonly 
ful  efforts  to  decode  mutilated  or  unknown  code  words;  success 
first-hand  knowledge  of  terminals,  docks  and  steamers,  as  they 
affect  packing;  immense  technical  and  non-technical  libraries; 
the  acquaintance  of  visiting  commercial  attaches  and  consuls; 
the  better  chance  of  securing  export  salesmen;  and  the  greater 
number  of  printing  establishments  capable  of  high-grade  work  in 
foreign  languages  and  for  foreign  markets. 

While  the  great  majority  of  these  advantages  are  inherent  in 
location  in  the  seaboard  city  merely  because  it  is  a  seaboard 
city,  it  will  be  noted  that  all  apply  with  decided  emphasis  in  the 
case  of  New  York.  Certain  of  these  advantages,  in  fact,  are 
afforded  only  when  export  headquarters  are  located  in  New  York. 

ADVANTAGES  OF  FACTORY  LOCATION 

Is  it  possible  that  the  export  manager  located  at  inland  factory 
can  hope  to  compete  against  his  brethren  located  at  seaboard, 
who  possess  this  formidable  list  of  advantages?  To  answer  the 
question  fairly,  a  list  of  the  advantages  possessed  by  the  inland 
export  manager  is  given. 

It  must  be  admitted  that  these  include: 

1.  Daily  conferences  with  the  highest  executives  of  the  enterprise 

2.  Personal  and  constant  participation  in  the  formation  of  the  general 
policies  of  the  enterprise 

3.  Decidedly  lower  overhead  cost  of  the  operation  of  the  export  depart- 
ment 

4.  Incentive  to  think  individually 

5.  Better  opportunity  to  supervise  interior  and  exterior  packing  of 
export  shipments 


EXPORT  DEPARTMENT  LOCATION  49 

C.  Daily  conferences  with  advertising,  credit,  finance  and  traffic  managers 
and  factory  superintendent 

7.  The  immediate  securing  of  proper  preferences  for  export  production 
and  shipment 

8.  Wiser  coordination  of  export  and  domestic  selling 

9.  Greater  elasticity  of  clerical  force 

10.  The  correct  application  of  the  "built-in"  export  department  plan 

11.  The  correct  viewpoint  from  which  to  see  the  enterprise  as  a  whole 

12.  The  certainty  of  a  correct  mutual  understanding  of  export  instruc- 
tions, policies  and  plans 

13.  The  position  to  present  the  full  export  argument  to  executives  at 
the  most  favorable  moment 

14.  The  correct  business  entertainment  of  visiting  customers 

15.  The  protection  of  personal  interest: 

(c)  By  being  on  the  spot 

{h)  By  the  close  friendship  of  associates,  maintained  by  daily  presence. 

Further  Elements  of  Strength. — To  these  fifteen  angles  of  adv- 
antage should  be  added  the  better  facilities  for  working  out  special 
export  products  and  their  containers;  the  first-hand  opportunities 
for  noting  tendencies  before  they  have  becomefacts;  the  abolition 
of  the  dangers  of  "out  of  sight,  out  of  mind ;"  the  hourly  assistance 
of  associates  familiar  with  every  tradition  of  the  enterprise;  the 
possibility  of  advancement  through  assumption  of  domestic  or 
combined  export  and  domestic  responsibility;  the  lower  cost  of 
enjoyable  living  and  the  better  chance  to  convert  into  the 
export  department  domestic  clerks  and  salesmen. 

Franklin's  Method  of  Cancellation. — When  Benjamin  Franklin 
was  confronted  bj^  a  prol)lem  not  susceptible  of  solution  at  a 
glance,  he  made  it  a  rule  to  list  all  the  relative  advantages,  cross 
off  the  slate  any  which  exactly  balanced;  and  then,  weighing  the 
worth  of  each  advantage  and  disadvantage,  continue  his  process 
of  elimination  until  the  answer  was  clear.  But  such  a  method 
has  its  limitations.  In  the  problem  of  the  correct  location  for 
the  export  manager,  there  are  few — if,  indeed,  any — exact  equiva- 
lents which  automatically  cancel  each  other. 

Take,  for  example.  Item  13,  under  the  advantages  of  location 
at  seaboard:  "Social  entertainment  of  customers,"  and  Item  14, 
under  the  advantages  of  location  at  factory:  "The  correct 
business  entertainment  of  visiting  customers."  Between  these 
two  seemingly  identical  items  there  is  a  world  of  difference. 
Unquestionably  the  correct  business  entertainment  at  factory  is 
of  infinitely  greater  value.  Social  entertainment  by  the  export 
manager  at  seaboard  is  usually  a  one-man  affair.     Its  favorable 

4 


50  EXPORT  MERCHANDISING 

effect  may  be  easily  erased  by  the  personality  and  pocket  book 
of  the  next  export  manager.  Correct  business  entertainment  at 
factory  brings  in  the  president,  general  manager  and  other  high 
officials  of  the  enterprise.  It  gives  the  visitor  an  adequate  idea 
of  the  enterprise — not  of  the  individual.  It  adds  to  the  sum 
total  of  the  visitor's  knowledge.  It  is  entertainment  on  a  high 
scale  of  instruction. 

Problems  of  Comparison. — Similarly,  it  is  impossible  to  com- 
pare the  advantage  of  daily  contact  with  leading  export  managers 
with  daily  contact  with  domestic  associates  in  the  same  enter- 
prise. The  experience  of  the  export  manager  may  make  the 
first  a  luxury  and  the  second  a  need.  The  lack  of  experience  in 
exporting  may  make  contact  with  leading  export  managers  a 
necessity  and,  with  associates,  a  luxury.  Again,  it  is  all  but 
impossible  to  determine  the  correct  value  of  Item  7,  of  seaboard 
advantages:  "More  frequent  voluntary  suggestions  for  agents 
and  customers."  There  was  a  case  where  this  accidental  item 
alone  ran  over  half-a-million  dollars  in  export  sales  in  one  week. 
Yet  there  are  export  managers  located  in  New  York  whose 
pursuit  of  volunteered  suggestions  has  ruined  their  chances  for 
true  success.  They  have  forgotten  how  to  originate;  how  to 
initiate;  how  to  sell. 

Examples  of  Sea  Board  Profits. — There  is  a  recorded  case 
where,  in  a  single  week,  one  New  York  export  manager  received 
voluntary  suggestions  which  resulted  in  sales  of  over  half-a- 
million  dollars.  Scores  of  less  spectacular  cases  can  be  cited 
where,  over  a  longer  period  of  time,  amounts  were  decidedly 
larger.  There  is  certainly  no  city  in  the  world  where  "tips" 
leading  to  desirable  foreign  connections  are  so  freely  given  as  is 
the  case  in  New  York  City.  The  alert  export  manager,  through 
the  export  organizations,  export  journals,  hotels,  steamship 
companies,  foreign  freight  forwarders  and  brother  export  man- 
agers, has  countless  opportunities  which  do  not  come  unsought 
and  unasked  to  his  inland  brother.  One  export  manager  who  is 
on  a  base  salary  and  commission,  cleared  $22,000  in  November, 
1914,  on  the  strength  of  four  tips. 

While,  under  the  advantages  of  seaboard  location  there  is 
listed  the  possibility  of  securing  better-trained  export  assistants 
and  clerks,  it  is  only  fair  to  point  out  that  this  is  a  double-edged 
sword — -for  it  is  also  easy  to  lose  the  export  assistants  and  clerks 
one  has  carefully  trained.     New  York  has  little  sentiment.     It 


EXPORT  DEPARTMENT  LOCATION  51 

takes  what  it  so(>s  that  it  wants.  It  bids  high  for  wliat  it  iioods. 
But  the  fact  remains  that  "ready  to  use"  well-trained  export 
assistants  and  clerks  can  be  boujiht  overnight  at  seaboard,  where- 
as the  inland  export  manager  must  make  his  own. 

When  Abnormal  Conditions  Rule. — Since  1914,  abnormal 
conditions  have  been  the  normal  condition.  The  inexperienced 
export  manager  located  inland,  and  thus  robbed  of  the  opportu- 
nity of  daily  contact  with  any  great  number  of  experienced 
exporters,  has  had  hard  sledding.  No  text  book  contains  even 
crude  hints  on  the  handling  of  the  unusual.  It  must  be  listed  as 
a  positive  advantage  of  seaboard  location  that  the  unusual,  the 
abnormal,  the  last-moment  correction  of  error  can  in  no  other 
way  be  met  adec^uately.  So,  too,  the  one  bond  for  "documents 
on  same  vessel  as  goods"  in  many  cases  is  the  personal  presence 
of  the  export  manager  located  at  seaboard. 

From  time  to  time  export  managers  emerge  from  a  directors' 
meeting  with  a  new  rank  and  title.  There  are  on  record  at  least 
forty  such  recent  cases  where  the  export  manager  was  located 
at  factory  headquarters.  This  is  overwhelmingly  large  in  com- 
parison with  the  advancements  of  export  managers  located  at 
seaboard.  The  export  manager  who  daily  identifies  himself  with 
the  enterprise  with  which  he  is  connected,  by  personal  and  con- 
stant participation  in  the  formation  of  the  general  policies  of  his 
house,  sooner  or  later  must  achieve  much  that  is  impossible  or 
all  but  impossible  to  the  export  manager  located  at  seaboard. 

Promotions  Due  to  Factory  Location. — One  nationally-known 
export  manager  was  made  vice-president  of  his  company  several 
years  ago,  because  he  was  close  enough  to  know  that  production 
was  the  important  factor  of  the  enterprise.  By  being  on  the 
spot  every  day  he  was  able  to  evolve  a  system  which  led  to  the 
entire  reorganization  of  the  enterprise,  and  with  it  a  new  title  and 
a  handsome  stock  interest.  Another  export  manager  later 
became  sales,  advertising  and  export  manager,  and  today  is 
president  of  a  company  whose  paid-in  capital  runs  into  the  mil- 
lions. Still  another  export  manager,  by  studying  the  needs  of 
his  company  and  its  competition,  brought  about  the  consolida- 
tion of  five  concerns  and  now  is  the  director  of  sales,  merchandise 
director  and  operating  vice-president,  with  a  salary  that  is  high 
in  the  five  figures. 

The  Overhead  Item. — Not  one  export  manager  in  ten  located 
at  seaboard  can  tell  the  extra  overhead  cost  of  seaboard  location. 


52  EXPORT  MERCHANDISING 

In  fact,  only  two  in  nearly  three  hundred  made  any  attempt 
to  give  exact  figures  when  the  matter  was  under  discussion. 
Only  increased  export  sales  over  earlier  years  have  permitted  this 
tremendously  important  factor  of  overhead  to  remain  unnoted 
in  so  many  cases. 

Coordinated  Selling  at  Home  and  Abroad. — Another  vital 
problem  faces  the  management  official  whose  enterprise  sells 
abroad  as  well  as  at  home.  It  is  certain  that  there  is  real  need 
of  wise  coordination  between  export  and  domestic  selling.  When 
conflicts  occur — and  they  occur  daily  in  these  United  States — 
it  is  usually  the  export  end  that  suffers.  This  is  particularly  true 
when  the  export  manager  is  not  located  at  factory.  A  recent 
instance  is  typical  of  what  many  industries  have  experienced. 
In  the  vast  majority  of  American  factories  export  orders,  even 
for  "stock  items,"  are  none  too  welcome  in  normal  times.  When 
domestic  demand  is  large  this  condition  is  intensified.  Take 
as  an  illustration  an  order  which  contains  items  which  fall  under 
the  Indian  Merchandise  Act,  or  the  Weights  and  Measures  Act 
of  New  South  Wales. 

These  require  special  labels  and  special  labelling.  Hence 
they  are  "specials"  and  taboo.  A  little  thing,  the  outsider 
would  say;  just  the  words,  "Made  in  U.  S.  A."  or  "4-oz.  net 
weight."  But  it  is  just  such  little  things  that  throw  production 
plans  askew,  that  interfere  with  the  highest  unit  output,  that 
are  the  last  straw  on  the  back  of  the  factory  foremen.  So,  too, 
with  orders  for  "tin-lined  cases,"  "monsoon  packing,"  "invoices 
in  Portuguese,"  "Venezuela  Classification,"  and  the  host  of 
other  peculiarly  export  demands. 

When  Absence  from  Factory  Breeds  Difficulties. — In  this 
case  from  the  experience  of  a  New  England  manufacturer,  the 
billing  clerks,  urged  to  produce  the  greatest  possible  number  of 
invoices  daily,  protested  to  the  billing  head.  She  passed  along 
the  protest  to  the  office  manager.  The  traffic  manager,  badly 
behind  on  tonnage  because  of  storms  and  local  embargoes,  grew 
to  hate  the  sight  of  an  export  order  with  its  time-taking  crating, 
strapping,  casing  and  waterproof  linings.  The  superintendent, 
who  had  been  ordered  to  standardize  everywhere  to  get  a  higher 
production,  noted  here  and  there  orders  for  different  styles, 
containers,  labels  and  interior  assembling.  From  every  depart- 
ment, protests  came  to  the  general  manager. 

Every  general  manager  is  paid  to  make  decisions.     In  the 


EXPORT  DEPARTMENT  LOCATION  53 

absence  of  the  export  nianagor  (who  when  at  seaboard  is  more 
Uke  a  travelhng  salesman  sending  in  orders  and  writing  in 
letters,  making  only  occasional  visits  to  the  factory)  is  it  any 
wonder  that  this  general  manager  usually  decided  against 
prompt  handling  of  export  orders  which  required  special  treat- 
ment in  any  department? 

The  Value  of  Personal  Presence. — When  the  export  manager 
is  at  factory  he  can  devise  ways  and  means  to  meet  all  obligations 
which  unfairly  restrict  exports.  On  the  special  labelling  he  can 
select  items  most  needed  and  have  them  labelled  at  the  end  of 
regular  runs.  On  the  tin-lined  cases  he  can  find  an  outside 
carpenter  and  outside  plumber.  For  the  invoicing,  he  can  point 
out  that,  dollar  for  dollar,  profit  for  profit,  it  takes  less  time 
even  when  invoices  are  in  foreign  languages,  because  the  average 
export  order  is  so  much  larger  than  the  average  domestic  order; 
or  he  can  send  the  invoices  out  to  be  typed  at  some  school  of 
languages  or  other  translation  bureau. 

The  export  strapping,  crating  and  marking  can  be  handled  by 
well-supervised  high  school  boys  hired  for  the  task  and  taught 
at  the  same  time  something  of  export  methods.  All  of  these 
makeshifts  have  tided  over  actual  cases  of  need — when  the 
export  manager  was  located  at  factory  and  was  in  a  position  to 
supervise,  invent  and  meet  in  person  every  objection  and  problem 
with  a  manifestly  common  sense  solution. 

Is  a  Compromise  Advisable? — The  entire  situation  calls  for 
what  on  the  surface  appear  to  be  compromises.  It  would  be 
costly  to  have  two  export  managers,  one  located  at  seaboard  and 
one  located  at  factory,  entirely  apart  from  the  unwise  division  of 
responsibility.  The  plan  has  been  tried — usually  unsuccessfully. 
The  weight  of  the  evidence  is  that  only  certain  peculiar  conditions 
demand  the  presence  of  the  export  manager  at  seaboard,  and 
that  the  presence  of  so  many  export  managers  at  seaboard  is  due 
largely  to  the  fact  that  the  disadvantages  have  been  discounted, 
just  as  the  advantages  have  been  too  obviously  present. 

If  it  is  assumed,  and  it  is  fair  to  assume,  that  there  are  advan- 
tages inherent  in  each  type  of  location,  and  if  we  are  convinced  of 
the  folly  of  employing  two  export  managers  to  only  one  export 
manager's  position,  we  have  at  least  taken  the  first  step  toward 
a  logical  solution  of  the  problem. 

Export  Requirements  at  Sea  Board. — From  this  foundation  it 
is  admitted  that  there  may  frequently  be  need  of  some  individual 


54  EXI'Oh'T  MKh'CIIANDISINa 

or  iiKlividuals  resident  at  seaboard,  without  admitting  that  this 
individual  or  these  individuals  need  be  export  managers.  It  is 
safe  to  go  a  step  further  and  admit  the  possibility  of  the  necessity 
that  at  times  some  one  of  these  individuals  must  be  the  export 
manager. 

Many  of  the  advantages  of  seaboard  location — advantages 
obtainable  only  through  the  personal  presence  of  the  export 
manager  at  seaboard — ^do  not  demand  the  continuous  presence 
of  the  export  manager  at  seaboard.  It  is  true  that  the  inland 
export  manager  who  stays  inland  can  never  hope  to  have  the 
wide  acquaintance  of  worthwhile  export  executives  possible  to 
the  export  manager  located  at  an  export  center.  It  is,  how- 
ever, entirely  possible  for  an  export  manager  to  locate  himself 
at  seaboard  for  two  or  three  years,  and  in  that  period  to  make 
lasting  friendships  and  lasting  contacts.  It  is  possible  in  the  same 
period  for  the  export  manager  to  familiarize  himself  so  thor- 
oughly with  the  advantages  the  seaboard  location  offers  that  he 
need  only  keep  in  touch  with  changing  conditions  by  a  series  of 
visits  to  seaboard,  plus  the  continuous  personal  presence  of  an 
assistant  who  has  worked  shoulder  to  shoulder  with  him  and  who 
knows  what  matters  are  of  interest  to  the  export  manager. 
A  Definite  Plan. — With  these  basic  strands  a  complete  fabric 
can  be  woven.  The  export  manager  can  spend  several  years  at 
his  factory,  learn  the  policies  of  his  company,  establish  a  friendly 
basis  with  his  personnel,  observe  and  study  his  products.  He 
can  build  within  his  organization  the  desire  for  a  constantly 
increasing  volume  of  foreign  trade  regardless  of  domestic  demand, 
and  acquaint  every  department  with  the  true  needs  of  export 
trade. 

By  this  time  he  may  realize  a  weakness  in  the  smoothness 
of  the  distribution  of  his  products  abroad.  He  can  easily 
locate  the  weakness  at  seaboard.  It  does  not  require  a  wonder- 
ful imagination  to  see  the  export  manager  act  upon  his  decision 
to  correct  this  weakness  by  training  an  assistant  at  the  factory 
to  carry  on  plans  formulated  by  the  export  manager.  The 
export  manager  at  this  stage  must  go  to  the  seaboard  location. 
As  the  months  roll  by  he  will  build  his  organization  to  function 
so  as  to  eliminate  the  weakness  in  distri])ution.  He  will  make 
new  friends  among  his  fellow-craftsmen.  He  will  locate  sources 
of  information  and  service,  and  learn  ])y  personal  (contact  of  their 
relative  values. 


EXPORT  DEPARTMENT  LOCATION  55 

Representation  by  Proxy  at  Seaboard. — The  stage  will  soon 
arrive  when  the  scaljoard  organization  will  no  longer  demand 
the  continuous  personal  presence  of  the  export  manager.  His 
continued  presence  is  often  due  to  desire  to  retain  his  environ- 
ment, rather  than  due  to  the  necessity  of  constant  personal 
supervision. 

The  final  stage  is  the  return  of  the  export  manager  to  factory. 
But  the  export  manager  will  never  again  bury  himself  in  the 
inland  factory.  Inevitably  he  will  decide  upon  a  policy  which 
will  include  frequent  visits  to  seaboard  to  maintain  his  valuable 
acquaintance,  to  improve  upon  the  work  of  his  seaboard  organiza- 
tion and  to  keep  him  in  touch  with  the  channels  through  which 
prospective  buyers  can  be  located  (juickly  on  arrival  from  foreign 
markets. 

No  One  Rule  Possible. — There  is  no  one  rule  for  the  proper 
location  of  the  export  manager.  From  the  lips  and  pens  not  only 
of  export  executives  but  also  boards  of  directors,  there  is  ample 
evidence  that  the  presumption  is  that  the  export  manager 
should  be  located  at  factory,  unless  evidence  of  compelling  nature 
can  be  produced  to  prove  the  contrary.  From  these  same 
sources  of  balanced  opinion  now  comes  the  additional  thought 
that  no  inland  export  manager  should  be  permitted  to  remain 
unfamiliar  with  what  seaboard  location  has  to  offer,  and  that  no 
inland  export  manager  should  receive  this  information  at  second 
hand. 

There  is  strong  testimony  in  favor  of  the  thorough  education 
of  the  export  manager  at  seaboard  and  his  return  to  factory  for 
permanent  headquarters.  It  is  not  to  be  gainsaid  that  this  is  a 
generalization  rather  than  a  hard-and-fast  rule.  No  amount 
of  theory  can  offset  the  advantage  of  seaboard  location  where 
sales  are  made  largely  through  export  commission  houses  or 
where  the  factor  of  the  visiting  buyer  is  predominant.  In  both 
of  these  groups  there  is  ample  theory,  ample  testimony  and  ample 
proof  that  the  export  manager  should  forego  the  advantages  of 
inland  location. 


CHAPTER  VII 
THE  "BUILT-IN"  EXPORT  DEPARTMENT 

"The  'built-in'  export  department  is  designed  to  bring  into  tlie 
export  work  the  best  brains  of  an  enterprise  in  the  best  way." 

— Export  Trade. 

Coordination  of  Deparlmenial  Effort  the  Backbone  of  the  'Built-in^  Export 
Department.  Team  Play  inthin  an  Enterprise  Capitalized.  The  'Built-in' 
Export  Department  as  an  Integral  Part  of  a  Business.  A  Trip  Through  Such 
a  'Department.'  Examples  of  Departmental  Practice  and  Procedure.  Con- 
ferences Under  the  'Built-in'  Idea.  Ten  Years'  Experience  of  The  Carter's 
Ink  Company. 

The  "Built-in"  Export  Department  is  the  proper  coordination 
of  the  different  departments  of  a  business  so  that  behind  export 
endeavors  will  be  the  mighty  thrust  of  the  powerful  domestic 
machine.  This  means  that  the  real  task  is  to  interweave  export 
needs  into  the  existing  fabric  of  a  business,  to  add,  if  any  execu- 
tive, only  one — an  export  manager,  just  as  a  business  has  its 
credit,  traffic  and  other  managers.  There  is  seldom  a  valid 
reason  for  export  activities  becoming  a  separate  entity  apart 
from  the  business  which  existed  before  its  coming.  It  is  wise  to 
refuse  to  accept  any  dicta  that  an  enterprise  must  suffer  from  the 
double  overhead  of  separate  export  sub-departments  in  order 
to  handle  credits,  shipments,  collections,  advertising  and 
production. 

Fundamental  Similarities. — In  ninety-five  out  of  one  hundred 
businesses  export  effort  should  go  hand  in  hand  with  domestic 
endeavor.  The  machines  which  fashion  unexcelled  products  for 
the  Boston  consumer  will  feel  no  reticence  in  doing  likewise  for 
the  user  in  Borneo.  The  human  machines  which  record  expendi- 
tures of  the  Traffic,  Credit,  Advertising  and  Manufacturing 
departments  can  perform  the  same  function  for  the  export  end. 
The  entry  and  billing  departments  to  whom  no  intricate  domestic 
billing  form  brings  terror,  though  covered  with  spaces  for  affidavits 
and  requiring  sextuplicate  copies,  can  handle  the  most  complicated 
export  order  with  equal  nonchalance. 

Every  business  man  knows  the  value  of  the  force  which  drives 
his  sales  onward  and  upward.     Call  this  force  "moniontuin," 

50 


THE  "BUILT-IN''  EXPORT  DEPARTMENT  57 

"good-will,"  "team  play"  or  "business  experience;"  under  what- 
ever name,  it  is  the  force  which  makes  a  "going  l)usincss"  a  far 
greater  asset  than  mere  piles  of  brick  and  stocks  of  merchandise. 

The  Value  of  Established  Momentum. — This  momentum  of 
the  successful  business  is  the  power  which  alone  can  make  export 
trade  a  profit-maker.  The  huge  export  selling  companies  of 
Big  Business  are  the  only  exceptions.  These  can  profitably 
operate  independently  from  the  domestic  organizations.  With 
their  foreign  markets  yielding  hundreds  of  millions  each  year, 
naturally  the  export  end  of  Big  Business  is  so  huge  that  it  can 
create  its  own  separate  power  and  develop  its  own  momentum. 

It  is  easy  to  define  a  "built-in"  export  department  as  one 
which  is  an  integral  part  of  a  business,  not  an  attachment  or  an 
excrescence.  By  virtue  of  its  being  just  as  much  a  part  of  a 
business  as  the  domestic  sales  department,  it  secures  the  benefit 
of  the  experience  of  one  expert  and  the  support  of  every  employee 
from  office  boy  to  president.  In  such  a  normal  atmosphere, 
freed  from  the  mysterious  fogs  in  which  many  have  sought  to 
envelop  foreign  trade,  it  thrives  in  exact  proportion  to  the  making 
and  selling  skill  of  the  company  itself. 

Growth  in  Acceptance  and  Scope. — It  is  now  the  standard  of 
companies  far  larger  than,  ten  years  ago,  it  was  the  feeling  should 
be  operated  under  the  "built-in"  export  department  plan.  Its 
fundamentals  are  sound.  Its  principles  are  connect.  Its  use, 
therefore,  is  not  a  matter  of  opinion,  but  of  condition.  Where 
it  should  be  used  it  has  no  equal.  Where  it  should  not  be  used 
it  is  at  least  probably  not  a  markedly  inferior  form  of  organization 
to  any  other. 

The  "built-in"  export  department  can  be  described  as  that 
form  of  organization  which  uses  the  full  force  of  the  domestic 
organization  in  exporting.  It  is  designed  to  capitalize  not  only 
the  momentum  of  the  existing  organization,  but  also  to  bring 
into  export  work  the  best  brains  of  the  enterprise  in  the  most 
effective  way.  It  is,  in  practice,  a  means  of  decreasing  sales 
expense  and  increasing  efficiency. 

Organizing  the  "Built-in"  Department. — The  whole  plan 
calls  for  an  executive  or  executives  above  the  export  manager; 
the  export  manager  with  or  without  domestic  as  well  as  foreign 
sales  interests,  and  an  adequate  division  of  responsibilities 
among  the  heads  of  the  advertising,  credit,  office,  collection, 
production,  traffic,  accounting  and  manufacturing  departments. 


58  EXPORT  MERCHANDISING 

It  has  been  called  the  "president  to  office  boy"  system.  It 
demands  the  whole-hearted  cooperation  and  constructive  labors 
of  each  department  head  involved,  and  it  requires,  for  its  satis- 
factory operation  without  modification,  a  well-balanced  group  of 
domestic  department  executives. 

An  imaginary  trip  through  a  plant  wherein  a  model  "built- 
in"  export  department  has  been  installed  will  illustrate  unusual 
possibilities.  First  of  all,  a  moment's  visit  is  made  to  the  desk 
of  the  advertising  manager.  The  question  is  asked,  "What  is 
your  part  in  the  export  work?" 

The  Advertising  Manager's  Part. — His  reply  comes  quickly. 
"First  of  all,  I  investigate  in  the  usual  common  sense  way  the 
media  which  are  recommended  by  the  export  man.  Just  as 
I  check  up  publishers'  claims  here  at  home,  I  check  up  the 
quantity  and  quality  of  export  circulation.  I  make  sure  that  the 
publication  reaches  the  countries  in  which  we  operate  or  desire  to 
operate.  I  seek  and  secure  proof  that  in  these  countries  the 
export  journal  is  read  and  appreciated  by  the  types  of  merchants 
who  will  buy  our  lines. 

"The  export  man  tells  me  the  products  he  wishes  to  feature, 
explains  the  nature  of  the  competition  we  must  meet  and  the 
particular  trade  or  consumer  outlets  with  which  demand  is  to 
be  created.  It  may  be  that  we  have  an  advantage  in  service  to 
dealers  rather  than  a  superiority  of  products.  We  may  well  be 
more  anxious  to  secure  agents  than  to  secure  immediate  orders. 
We  may  need  the  solid  foundation  of  an  educational  campaign. 
My  work  is  to  make  the  printed  word — our  advertising — in 
magazines,  newspapers,  outdoor  and  indoor  signs,  catalogs  or 
dealer  literature  a  clean-cut  piece  of  sales  and  good-will 
building." 

In  a  recent  article  in  System  a  case  was  cited  where  an  export 
manager  insisted  on  writing  all  export  advertising,  with  the 
result  that  he  made  a  motor  car  in  the  $5,000  to  $16,000  class 
appear  about  the  equal  of  a  $1,500  rival.  That  car  is  sold  and 
appreciated  by  its  individual  owners  because  of  its  "atmosphere." 
The  advertising  man  knew  that  particular  fundamental;  the 
new  expoi't  man  neither  knew  it  nor  how  to  create  it. 

With  the  Credit  Man. — It  need  be  no  humiliation  to  any  export 
man  to  admit  that,  with  full  data  before  him,  the  credit  man  is 
the  better  credit  man  on  a  foreign  risk  as  well  as  on  a  domestic 
one.     If  he  seeks  consolation  for  the  sad  fact,  he  can  think  of 


THE  "BUILT-IN"  KXPOItT  DEPART M EST  59 

his  own  fat  pay  envelope  or  neat  check  and  think  that,  after  all, 
while  he  cannot  divide  or  multiply  on  a  computing  device,  the 
firm  still  thinks  at  least  as  much  of  him  as  it  does  of  the  clerk  who 
can  make  the  machine  do  everything  except  talk. 

Without  the  usual  fear  and  trembling,  the  visitor  approaches 
the  credit  man.  Even  though  he  has  heard  that  the  credit 
man  is  often  the  stumbling-block  in  starting  out  in  exporting, 
we  have  no  wm-ries,  for  this  particular  "Watch-dog  of  the  Treas- 
ury" is  passingfavorably  on  foreign  credit  lists  totalling  hundreds 
of  thousands  of  dollars  each  year. 

Ho  puts  this  question  to  the  credit  manager:  "Just  how  do  you 
dovetail  into  this  'built-in'  export  work?" 

The  Credit  Man's  Function. — "I  fit  into  our  plan  of  handling 
foreign  business  as  smoothly  and  closely  as  a  cartridge  into  a 
Winchester  rifle,"  he  replied.  "My  part  is  to  keep  our  export 
work  directed  along  profitable  lines.  By  the  cooperation  of  the 
export  man  we  start  right  by  eliminating  undesirables  before 
solicitation.  By  cooperation  we  select  the  most  advantageous 
times  to  work  hardest  in  each  country,  and  seldom  buck  our  heads 
against  the  stone  wall  of  local  adverse  financial  conditions. 

"When  the  export  man  gets  an  incjuiry  from  a  foreign  merchant 
we  start  our  credit  investigation,  so  that  up-to-date  credit 
reports  come  in  as  soon  as  the  order.  Orders  come  to  my  desk 
from  the  export  selling  end  with  all  information  I  need  to  pass 
on  credit  from  every  angle."  First  of  all,  the  export  man  attaches 
to  the  order  credit  reports  on  the  foreign  merchant.  These  he 
secures  from  export  organizations  and  export  journals  in  which 
we  advertise.  These,  combined  with  my  credit  agency  reports 
and  my  interchange  of  foreign  credit  experience  through  the 
National  Association  of  Credit  Men,  give  ample  data.  Through 
these  lines  I  know  all  I  need  to  know  of  the  foreign  merchant's 
character,  capability  and  capital.  The  export  manager  also 
gives  me  information  regarding  our  need  of  representation  in 
the  city  or  country  from  which  the  order  originates.  Where  we 
have  no  trade  outlet,  I  must  be  more  liberal  than  where  we  have 
a  dozen  good  dealers  selling  our  lines.  This  is  an  important 
point  too  often  overlooked. 

Further  Cooperation  between  Departments. — "Then,  too, 
there  is  a  slip  showing  me  the  profit  on  the  order.  Our  lines  vary 
widely  in  profit,  particularly  in  these  days  of  wartime  costs.  If 
the  order  shows  a  high  per  cent  of  profit,  I  can  be  more  liberal 


00  EXPORT  MERCHANDISING 

than  on  orders  where  we  cannot  lose  two  accounts  in  one  hundred 
and  still  be  ahead  of  the  game, 

"Passing  on  foreign  credits,  aiding  in  selecting  business-like 
foreign  agents  and  guiding  export  sales  toward  the  right  markets 
at  the  right  time  make  me  feel  that  I  am  playing  an  important 
part  in  our  export  trade." 

The  credit  manager  is  an  expert  in  piecing  together  information 
and  determining  whether  an  individual  or  firm  is  a  good  or  bad 
risk.  Before  he  is  called  upon  to  pass  decision  he  will  have  before 
him  data  ranging  from  a  detailed  statement  of  liability  and 
assets  to  comments  on  his  reputation  for  prompt  payment  and 
business  ability  in  his  home  city.  No  foreign  order  should  be 
credited  on  suspicion  and  no  foreign  order  refused  without  con- 
sideration of  need  of  representation  in  the  city  from  which  it 
comes  and  also  the  profit  margin  on  the  particular  order  in 
hand. 

In  the  Production  Field. — The  factory  superintendent  has  a 
frank  confession.  He  considers  export  work  an  admirable  testing 
ground  for  the  products  for  manufacture,  assembling  and  packing 
of  which  he  is  responsible.  The  visitor  may  remember  one  or 
two  of  his  remarks.  "  The  little  differences  in  our  lines  which  we 
make  in  tsome  few  cases  are  more  than  offset  by  the  intimate 
knowledge  we  gain  of  the  best  practices  in  manufacture  of  foreign 
makers.  I  can  remember  well  how  from  one  Italian  sample  we 
learned  the  way  to  protect  one  of  our  fragile  containers.  The 
clever  conception  of  a  Paris  perfumery  house  was  so  well  adapted 
to  our  needs  that  by  coming  in  competition  with  it  in  India  we 
learned  how  to  save  $1  a  gross  on  all  domestic  as  well  as  export 
sales  and,  better  still,  have  a  more  attractive  package.  Meeting 
the  world  in  competition  is  the  only  real  test  of  any  product." 

When  Export  Packing  Is  Involved. — Packing  is  often  a  stumb- 
ling-block for  exporters.  Yet  it  would  be  absurd  to  think  that  a 
capable  factory  superintendent  and  a  capable  traffic  manager 
would  be  incapable  of  handling  any  order  //  they  knew  in  advance 
the  conditions  to  he  met.  The  export  man  can  secure  from  sources 
of  export  information  exactly  the  difficulties  of  any  journey  on 
which  his  goods  can  be  sent,  and  books  written  by  experts  on 
export  packing  which  will  show  every  detail  down  to  the  weight 
and  type  of  nails  to  be  used  and  where  they  should  be  driven. 

The  same  type  of  message  must  come  from  the  collection 
manager  and  the  office  manager.    All  are  glad  to  testify  that  their 


rUJ'J  "BVILT-JN"  EXPORT  DEI'A  h'TM KAT  61 

part  of  the  "built-in"  export  department  has  been  an  asset  in 
their  domestic  work. 

First  Steps  in  Organization  Work. — ^It  must  not  be  assumed 
that  such  a  "built-in"  model  springs  into  being  over  night  or 
without  careful  planning.  It  is  an  excellent  start  to  copy  the 
plan  of  a  new  but  rapidly  growing  manufacturing  exporter  in  the 
Middle  West,  particularly  in  the  first  year  of  foreign  sales 
endeavor.  The  first  Friday  evening  of  each  month  is  reserved  by 
every  department  head  for  an  export  meeting  at  the  office.  A 
nearby  caterer  supplies  a  hearty  dinner  at  6:00  p.m.  sharp,  in  the 
Board  of  Directors'  Room,  which  is  followed  by  an  hour's 
discussion  of  export  matters  with  the  export  manager  as  chair- 
man. At  the  end  of  the  hour  all  are  free  to  depart.  This 
enables  theatre  or  other  evening  engagements  to  be  kept  regard- 
less of  the  meeting.  It  is  seldom  that  the  meeting  itself  breaks 
up  before  9 :00  p.m.  with  a  full  attendance,  because  of  the  growing 
realization  of  the  value  of  the  mutual  interchange  of  ideas,  which 
is  stimulated  by  the  rapid  cross-fire  of  questions  and  suggestions. 

The  evening  conference  plan  is  one  of  the  best  means  of  secur- 
ing concerted  effort  to  build  export  trade  in  the  first  and  even 
later  years.  It  is  urged  that  every  manufacturing  exporter 
give  it  at  least  a  trial.  It  will  surprise  many  executives,  who  are 
accustomed  to  feel  that  department  heads  are  valuable  solely 
within  their  respective  departments,  to  learn  from  such  meetings 
that  the  factory  superintendent  or  credit  man  may  be  a  valu- 
able source  of  export  sales  and  export  advertising  ideas.  The 
American  business  man  of  today,  no  matter  by  what  means  he 
earns  his  daily  bread,  is  really  a  merchandiser. 

Personal  Initiative  Stimulated. — There  is  nothing  automatic 
about  the  workings  of  the  "built-in"  export  department  except 
the  handling  of  routine.  It  must  be  emphasized  most  strongly 
that  its  success  or  its  failure  invariably  depends  upon  the  calibre 
of  the  various  executives,  department  heads  and  their  associates. 

The  handling  of  the  export  order  on  the  "built-in"  export 
department  plan  involves  only  accurate  records,  definite  written 
instructions  and  adequate  supervision.  In  a  few  years  of 
actual  operation  it  proves  that  the  clerical  staff  of  an  enterprise 
actually  fails  to  recognize  any  difference  between  foreign  and 
domestic  orders.  Each  type  has  its  regulations  and  each  clerk 
comes  to  know  that  all  regulations  must  be  carried  out  rigidly 
and  exactly. 


62  EXPORT  MERCHANDISING 

An  Example  of  Use  of  Records. — As  an  example.  An  order 
arrives  from  Bolivia;  it  reaches  the  Billing  Department  with 
discount,  draft  terms  and  instructions,  a  notation  "Bolivian 
Classifications"  and  several  other  abbreviated  instructions. 
Take  one  item,  "Bolivian  Classifications"  as  an  example  of  auto- 
matic handling.  The  head  billing  clerk  turns  to  her  loose-leaf 
"Foreign  Book"  and  attaches  to  the  order  the  sheet  "Bolivian 
Classifications,"  passing  it  to  a  lulling  clerk  who  in  entering  the 
order  types: 

"1  gross  D-7647  5  oz.  Violet  Toilet  Water"  and  underneath 
adds,  mechanically,  from  the  sheet  attached  "Clas.  IV.  Sec.  4," 
which  she  finds  against  "Violet  Toilet  Water." 

The  Shipping  Clerk's  Instructions. — The  shipping  clerk  finds 
on  the  typed  order  that  reaches  him  "gro.  &  net  wt.  lbs.  and  k.," 
which  he  knows  is  short  long-hand  for  "gross  and  net  weights  in 
pounds  and  kilos."  Wherever  the  usual  packing  is  used  he 
turns  to  his  "Weights  and  Measurements  Book"  and  copies  the 
figures  showing  the  weight  of  that  particular  package  in  pounds 
and  kilos  as  recorded.  If  it  is  specially  packed,  he  places  it  on 
platform  scales,  notes  that  it  is  114^:5  lbs.,  glances  at  the  table 
of  metric  equivalents  beside  the  scales  or,  today,  at  the  double 
reading  on  the  scales,  and  enters  it  as  52.00  kilos,  and 
walks  on. 

The  attitude  of  the  man  delegated  to  cxpoi't  managerial  work 
is  well  indicated  ])y  an  excerpt  from  the  reply  of  a  New  England 
export  manager  to  an  "export  specialist"  in  the  Middle  West 
who  claimed  that  the  export  manager  should  be  100  per  cent  in 
charge  and  execution  of  overseas  activities.  The  New  Englander 
in  his  reply  pointed  out  that  businesses  may  entail  more  or  less 
red  tape  in  interdepartmental  communications,  but  if  the  system 
is  a  good  one  the  units  are  so  united  that  a  momentum  results, 
beyond  the  capacity  of  any  one  individual. 

So  long  as  the  head  of  the  export  department  is  governed 
only  by  the  "Private  Office"  and  not  an  overtitled  shipping 
clerk,  he  obtains  all  the  benefits  of  the  machine,  and  his  possi- 
bilities are  not  limited  to  his  single-handed  efforts. 

The  Costliness  of  Duplication. — Why  not  permit  the  export 
manager  to  use  the  cooperation  offered  by  the  tools  in  front  of 
him,  instead  of  building  an  entirely  new  set  when  the  work  is, 
after  all,  90  per  cent  the  same?  A  few  additional  tools  and  a 
few  adaptations  in  other  cases  enable  the  export  man  to  get  the 


THE  "  BUILT -IN"  EXPORT  DEPARTMENT  63 

full  advantage  of  the  powers  which  surround  him  for  simplifica- 
tion of  handling  foreign  business. 

The  office  boy,  the  entry,  billing,  traffic  and  statistical  and 
advertising  departments  should  divide  the  work  into  proper 
units  for  handling.  A])ove  all,  the  credit  department  and  the 
export  sales  end  should  be  kept  separate.  If  foreign  credits  are 
based  on  credit  principles  the  regular  credit  department  can 
handle  them  better  than  the  export  manager,  in  the  vast  majority 
of  enterprises. 

Departmental  Responsibilities. — Each  department  should 
assume  its  proper  share  of  the  handling  of  the  export  order. 
Everything  except  the  getting  of  business  and  the  ironing  out  of 
the  wrinkles  in  handling  is  eliminated  from  the  shoulders  of  the 
export  manager.  Such  matters  as  policy,  additional  salesmen, 
agency  arrangements,  new  lines,  studying  competition,  domestic 
and  foreign,  will  amply  fill  the  time  left  vacant  by  turning 
over  details  to  others,  and  in  such  a  business  result  in  greater 
efficiency. 

It  will  be  found  that  the  export  managers  operating  under 
"built-in"  conditions  are  willing  to  admit  that  many  times  the 
heads  of  the  advertising,  traffic  and  statistical  departments  have 
helped  mightily  in  bringing  in  a  record  export  year.  In  one 
industry  the  chemical  and  mechanical  laboratories  made  many 
thousand  experiments  to  bring  out  new  lines  to  meet  foreign 
competition. 

THE  "BUILT-IN"  DEPARTMENT  AT  WORK 

One  excellent  illustration  of  this  type  of  cooperation  as  opposed 
to  the  "one-man  100  per  cent"  idea  clearly  indicates  its  wide 
range  of  possibilities.  An  English  competitor  of  an  American 
manufacturer  brought  out  a  novel  product,  but  one  which 
failed  under  rigid  service  tests.  The  export  manager  saw  that 
the  product  if  freed  from  defects  would  meet  an  export  need. 
The  general  manager  approved  the  idea  of  endeavoring  to  perfect 
the  product,  and  referred  it  to  the  laboratories. 

Later,  the  general  manager  personally  supervised  the  designs 
for  the  containers,  having  been  furnished  with  samples  of  the 
competitor's  packages;  the  purchasing  department  secured 
samples  and  tenders  on  the  special  attachments;  the  cost  depart- 
ment estimated  the  costs  of  the  various  sizes;  the  manufacturing 


64  KXI'ORT  MERCIJANDISJNd 

department  gave  data  regarding  best  methods  of  put-up  and 
packing;  the  advertising  department  handled  the  labels  and 
circulars;  while  all  the  export  manager  handled  was  the  gathering 
of  data  and  suggestions  on  which  the  completed  package  was 
based. 

In  its  completed  form  there  was  nothing  but  the  idea  which  the 
export  manager  could  claim  as  his  own  and  his  alone.  But  it  was 
certainly  better  for  the  cooperation  of  many.  When  completed, 
it  embodied  the  specific  experience  of  each  department  interested 
in  its  manufacture. 

Under  the  "built-in"  export  department  plan,  if  the  export 
man  writes  on  the  order  "sixty  day  S/D  attached  to  B/L,  D/A 
through  Int.  Bk.  Corp."  the  collection  end  knows  what  is  wanted, 
just  as  the  manufacturing  end  recognizes  "Extra  XL64  wrapper, 
top  &  sides,"  and  the  traffic  department  "gro.,  net,  legal 
wts.,  lbs.,  &  kilos,  pckg.  list,  each  product  separate  packing." 

TEN  YEARS'  EXPERIENCE  RECORDED 

The  following  history  of  the  experience  with  the  "built-in" 
export  department  of  The  Carter's  Ink  Co.,  Boston,  U.  S.  A., 
is  given  not  because  of  the  author's  connection  with  it,  but 
because  it  has  been  consciously  in  existence  for  so  many  years 
and  under  control  of  such  experienced  management  officials  and 
executives.  These  years  have  ironed  out  the  wrinkles  that,  in 
newer  "built-in"  organizations,  seem  to  loom  as  most  serious 
obstacles.  To  some,  these  obstacles  seem  insurmountable  and 
were  accepted  as  proofs  of  a  vital  weakness  of  the  plan  as  a  whole. 
Yet  they  are  but  wrinkles  awaiting  the  iron  of  ability,  not  only  to 
be  levelled  but  also  to  be  a  perfect  part  of  an  unwrinkled  surface. 

Management  Control. — It  may  be  interesting  to  see  the 
organization  that  handles  the  "built-in"  department  as  proofs. 
The  Carter's  Ink  Co.  for  over  half  a  century  has  been  operated  on 
a  plan  of  divided  domestic  and  export  responsibihty.  Its 
president  and  its  general  manager  collaborated  in  planning  for 
foreign  trade.  In  addition  to  the  scattered  customers  which  had 
gravitated  naturally  to  it  in  the  previous  forty  years,  it  had  branch 
houses  in  London,  Brussels,  Copenhagen,  Hanover  and  Moscow. 
Further  than  this,  selling  activity  in  the  Far  East  and  in  Latin- 
American  had  been  decided  upon  before  the  present  sales  and 
export  manager  came  with  the  company. 


THE  "BUILT-IN"  EXPORT  DEPARTMENT  65 

Out  of  this  increasing  activity,  together  with  pressure  of  other 
duties  on  the  president  and  the  general  manager,  grew  the  need 
for  an  export  executive.  Both,  however,  are  still  thoroughly  con- 
versant with  export  policies  and  achievements.  They  personally 
handle  various  matters  in  which  they  have  a  long-standing 
interest,  and  they  keep  in  touch  with  the  fortunes  and  mis- 
fortunes of  customers  in  every  quarter  of  the  world.  Their 
letters  of  congratulation  and  sympathy,  like  their  entertainment 
of  old  and  new  friends  and  agents,  are  proofs  positive  of  their 
continued  interest  and  actual  participation  in  the  "built-in" 
method  of  export  operation. 

The  direct  supervision  and  control  of  both  domestic  and 
export  sales  efforts  is  exercised  by  the  general  manager.  His 
part  is  constructive  as  well  as  critical.  He  is  a  strong  believer 
that  there  are  few  truly  "export"  problems  and  that  the  great 
majority  of  so-called  "export"  problems  are  really  "business" 
problems. 

His  supervision  of  export  sales  has  been  largely  in  recent 
years  a  matter  of  passing  on  detailed  recommendations,  appor- 
tionment of  stock  between  foreign  and  domestic  needs  and  active 
assistance  in  the  war  and  post-war  problems  of  exporting.  As 
long  as  twenty  years  ago  he  was  thoroughly  familiar  with  export 
selling  and  personally  initiated  and  developed  the  beginnings  of 
the  present  extensive  interests  in  the  Orient. 

The  Export  Executive's  Duties. — The  initiative  in  export  woik 
falls  on  the  sales  and  export  managei'.  For  one  brief  year,  1909, 
or  rather  a  part  of  it,  he  had  no  domestic  duties;  since  then,  the 
call  of  the  domestic  field  and  the  opportunity  to  participate  in 
domestic  work  has  pulled  him  into  divided  but  allied  duties. 
His  export  work  has  been  to  maintain  and  increase  sales  through 
branch  houses;  secure,  train  and  coach  export  salesmen;  appoint 
and  develop  agents,  and  to  aid  and  be  aided  by  every  man  in  the 
organization,  directly  or  indirectly  engaged  in  foreign  trade. 

The  Work  of  an  Assistant. — A  trained  assistant  shares  with 
him  the  duty  of  initiative  and  is  in  direct  control  of  export  orders 
from  their  receipt.  He  works  particularly  in  cooperation  with 
salesmen  and  agents  in  the  field.  He  employ's  a  leak-proof 
system  of  following  an  export  order  from  mail  clerk  to  actual 
shipment  from  port  of  departure  which  is  the  invention  of  the 
former  associate  export  manager,  later  the  Far  East  representa- 
tive of  the  company.     The  assistant  is  in  direct  contact  with  the 

5 


66  EXPORT  MERCHANDISING 

export  order  at  every  stage  and  decides,  with  very  few  exceptions 
on  the  order  of  shipment.  Like  the  others,  he  has  domestic  as 
well  as  foreign  duties  and  is  in  charge  of  the  Sales  Department 
clerical  staff. 

Elasticity  of  Executive  Sales  Staff. — Two  of  the  associate 
sales  managers  are  also  ambidextrous  in  ability  to  handle  both 
domestic  and  foreign  customers  and  salesmen.  In  fact,  before 
the  present  organization,  which  has  enabled  them  both  to 
devote  more  time  to  important  phases  of  domestic  selling,  they 
handled — one  on  Inks  and  Adhesives  and  one  on  Carbon 
Papers  and  Typewriter  Ribbons — both  export  and  domestic 
merchandising. 

Another  associate  sales  manager  devotes  his  energies  to  Carbon 
Papers  and  Typewriter  Ribbons  incidentally  known  as  the 
unofficial  "head  translator" — based  upon  his  exceptional 
knowledge  of  and  excellence  in  written  and  spoken  Spanish. 
In  practice  his  merchandising  skill  makes  it  unwise  for  him  to 
be  permitted  to  make  more  than  an  emergency  translation. 
His  work  centers  largely  on  goods,  prices  and  cooperation  with 
the  export  department.  He  is  the  direct  link  between  the  sales 
and  manufacturing  departments  as  regards  carbons  and  ribbons. 

The  Advertising  Manager's  Function. — The  advertising  man- 
ager is  the  presiding  genius  of  both  domestic  and  export 
advertising.  In  addition  to  writing  and  designing  copy  for 
magazines,  newspapers  and  street  cars,  he  has  produced  export 
dealer  literature,  including  bulletins,  booklets,  circulars  and  service 
letters.  The  cardboard,  tuscaloid  and  metal  signs  for  indoor 
and  outdoor  use;  the  banners,  life-size  window  displays,  store 
fixtures  and  silent  salesmen  also  lie  within  his  province,  as  well  as 
the  annual  New  Year's  Greetings.  The  House  magazines.  The 
Scribe  and  El  Escritor,  are  further  proofs  of  the  value  of  the 
assistance  possible  through  the  advertising  department.  He  is 
an  authority  and  lecturer  on  export  advertising. 

An  excellent  proof  of  the  inherent  value  of  the  "built-in" 
idea  is  shown  in  the  credit  department.  The  Foreign  Finance 
Manager  is  also  the  Credit  Manager.  By  his  more  than  twenty 
years  contact  with  direct  exporting  he  has  been  able  to  guide 
local  and  national  credit  organizations  into  foreign  credit  activi- 
ties. His  advocacy  led  to  the  establishment  of  the  Foreign 
Credit  Interchange  Bureau  of  the  National  Association  of  Credit 
Men.     As  Chairman  and  National  Vice  Chairman  he  has  led 


THE  ''BUILT-IN"  EXPORT  DEPARTMENT  67 

credit  men  into  improvements  in  foreign  credit  technique.  As  an 
author  and  lecturer  he  has  brought  about  a  clearer  understanding 
of  the  credit  function  overseas.  As  Vice  President  of  a  most 
important  credit  body  he  is  leading  manufacturers  to  foreign 
sales  on  a  sound  credit  basis.  It  is  logical  that  his  acquaintance 
is  as  large  in  export  as  in  credit  circles.  He  is  one  of  the  executive 
committee  of  the  Boston  Export  Round  Table,  selected  for  that 
honor  because  of  his  contril)utions  to  the  cause  of  sound  exporting. 

In  the  Traffic  Department. — The  traffic  manager  and  associate 
manager  are  both  export  enthusiasts — which  was  true  even  when 
the  war  era  demand  so  greatly  outran  production  as  to  cause  all 
but  the  best-informed  and  most  active  traffic  men  to  regret  the 
day  their  enterprise  ever  accepted  a  foreign  order. 

The  traffic  manager  invented  the  "First  Aid  to  the  Injured 
Export  Shipper"  form,  and  is  the  author  of  a  comprehensive 
"  Export  Instructions  Sheet,  "  which  is  a  compact  and  convenient 
means  of  supplying  the  full  details  to  a  forwarder.  His  associate 
is  directly  in  charge  of  the  Export  Traffic  Department. 

How  the  Superintendent  Collaborates. — The  superintendent 
has  been  for  twenty  years  and  more,  interested  in  the 
manufacturing  problems  inevitable  to  any  exporter  with  wide 
distribution.  The  many  special  packages  which,  prior  to  the 
government's  interest  in  standardization  of  containers,  were 
used  liberally  in  the  Australian  and  English  markets;  the  light 
but  strong  boxes  made  in  the  box  making  plant,  with  interior 
construction  of  his  planning;  the  factory  handling  of  some  of 
the  larger  export  orders — these  are  but  a  few  of  his  export 
activities  which  go  into  even  the  details  of  the  shaft,  ferrule  and 
bristles  of  a  single  brush  for  use  in  a  special  export  package. 

The  Laboratories  in  Exporting. — The  ink  and  adhesive  chemist 
is,  by  adoption  and  proclamation,  an  export  man.  He,  after 
three  solid  years  of  experimentation,  invented  Cico — the  liquid 
paste.  This  was  an  export  problem,  for  mucilage  is  by  no  means 
in  every  way  a  desirable  adhesive,  and  solid  white  paste  is 
decidedly  a  perishable  product  in  tropical  countries.  This  Cico — 
the  liquid  paste — after  three  years'  further  trial,  was  launched 
in  the  domestic  field  and  now  outsells  all  other  desk  adhesives. 

So,  man  by  man,  the  personal  proof  could  be  produced  of  the 
extent  to  which  the  "built-in"  export  department  idea  has 
successfully  been  carried  out  in  The  Carter's  Ink  Co. 


CHAPTER  VIII 
THE  EXPORT  MANAGER 

"The  right  sort  of  man  at  the  export  manager's  desk  has  a  per- 
spective as  wide  as  the  world  itself." — T.  H.  Williamson. 

Placing  the  Responsibility  for  Export  Initiative.  Qualifications  of  tlic 
Export  Manager.  Methods  of  Development.  Transfer  of  a  Domestic  Sales 
Executive  to  Export  Management.  Detailed  Example  of  the  Training  of 
an  Export  Manager.  What  an  Export  Manager  Should  Know.  Example 
of  Correct  Use  of  Statistics.  Broadening  Effects  of  Study  of  History  of  Inter- 
7uitional  Commercial  Exchange. 

The  first  duty  of  a  manufacturer  seeking  foreign  trade  is  to 
place  the  responsibiHty  of  export  initiative  on  one  man.  This 
man  may  be  the  president  of  the  company  or  any  subordinate 
with  whom  he  would  entrust  a  similar  domestic  effort. 

From  Within  the  Enterprise. — The  exceptionally  fortunate 
may  find  an  experienced  export  manager  in  the  market,  but  the 
majority  must  create  their  own.  This  is  just  as  possible  and 
profitable  as  the  development  of  any  department  head.  The 
executive  ability  which  can  successfully  administer,  correct  and 
suggest  to  manufacturing,  credit,  traffic  and  sales  departments 
can  add  the  development  of  an  export  department  with  but  little 
expenditure  of  time  or  energy.  This  is  sound,  because  the  funda- 
mentals of  export  sales  are  identical  with  those  of  domestic 
sales  and  every  question  of  foreign  sales  policy  is  based  on 
common  sense  principles. 

In  every  business  there  exists  the  young  employee  who  has 
shown  intelligence,  loyalty  and  ability  and  whose  advancement 
seems  blocked  by  existing  minor  executives.  This  is  ideal  mater- 
ial^ for  the  future  export  manager.  His  first  asset  beyond  his 
natural  qualifications  is  his  knowledge  of  the  line  and  his  famili- 
arity with  at  least  some  of  the  methods  and  policies  of  the  enter- 
prise. If  export  growth  is  anticipated  (and  unless  it  is  then  it  is 
folly  to  start),  it  is  wise  to  consider  the  future  before  parcelling 
the  sales  end  of  exporting  among  the  inside  domestic  sales 
organization,  unless  in  it  can  be  seen  the  opportunity  for  its 
gradual  focussing  on  a  selected  individual. 

68 


THE  EXPORT  MANAGER  69 

Importance  of  Direct  Interest. — Sooner  or  later  the  export 
sales  end  must  work  directly  with  the  management  of  the  busi- 
ness. Particularly  at  the  start  of  such  an  important  addition 
to  a  business  it  is  well  worth  the  time  and  thought  of  a  high 
executive  to  ensure  the  soundness  of  the  first  steps. 

Because  in  any  sales  endeavor  it  is  wise  to  have  one  man 
responsible  for  initiative,  it  is  a  real  economy  to  train  one  man  to 
specialize  in  the  effort  to  secure  foreign  trade.  On  him  should 
be  placed  the  burden  of  laying  out  the  plan  of  action,  of  selecting 
the  markets  to  be  attacked,  of  securing  the  necessary  information 
regarding  surface  differences  of  detail. 

What  kind  of  man  is  this  so-called  "specialist?"  There  are 
men  and  women  who  deserve  this  term  in  such  divers  products 
as  garters  and  pianos,  paints  and  patent  medicines,  carriages 
and  railroads,  and  nine  hundred  more  whose  lines  range  in 
retail  value  from  a  cent  a  package  to  six  figures  per  unit.  In 
this  group  surely  should  be  the  wizard  of  wizards,  if  he  exists. 
The  plain  prosaic  fact  is  that  the  better  the  business  man,  the 
better  the  export  manager. 

Just  as  the  business  man  who  seeing  for  the  first  time  a  violin 
played  thought  the  right  hand  all-important,  while  the  musician 
beside  him  knew  the  left  hand  to  be  responsible  for  four-figured 
salary  per  recital,  the  average  man  is  far  afield  in  export  matters. 
Probably  a  census  of  non-exporters  would  rank  a  knowledge 
of  foreign  languages  and  extended  foreign  travel  as  leading 
qualifications  for  the  export  manager,  whereas,  the  best  of 
export  managers  would  rank  highly,  "Ability  to  read  and 
write — English." 

Accurate  Information  Available. — There  is  in  this  country 
information  carefully  recorded,  indexed  and  cross-indexed,  not 
as  the  result  of  hasty  tourist  trips  or  business  visits  confined  to  a 
certain  line  of  trade,  but  deliberately  gathered  and  accurately 
assembled  by  trained  market  investigators  in  governmental  and 
institutional  employ.  This  information,  supplemented  by  the 
reliable  monographs  of  students  of  commercial  and  financial 
geography,  supplies  the  base  on  which  the  export  manager's 
abihty  can  be  applied.  His  abihty  "to  write — English"  (the 
first  qualification  of  the  export  executive)  applies  not  alone  to 
English-speaking  foreign  counti-ies,  but  also  to  the  world.  For 
the  man  who  writes  good  English  can  make  every  shade  of  mean- 
ing known  to  the  export  translator.     To  no  other  should  be  given 


70  EXPORT  MERCHANDISING 

the  important  duty  of  conveying  a  bii.siness  message  to  a  cus- 
tomer or  prospective  customer  in  another  land  in  another  tongue. 
But  the  ability  "to  write — English"  has  great  inside  value  in 
export  endeavor.  Those  who  have  exported  have  broadened, 
have  known  what  it  means  to  the  beginner  and  expert  alike  to 
secure  information  by  letter  from  a  brother  exporter,  and  almost 
without  exception  welcome  the  opportunity  to  repay  courtesies 
they  have  accepted  from  brethren  of  the  craft.  Add  to  this  the 
value  of  governmental  and  institutional  advice  and  data — all 
awaiting  the  man  who  has  the  "ability  to  write — English"  and 
we  are  forced  to  confess  that  the  "insider's"  specification  of 
cpialifications  is,  after  all,  the  right  one. 

The  Value  of  Exchange  of  Export  Information. — It  is,  of  course, 
possible  that  by  diligent  application  to  the  text  books  on  tennis 
and  constant  practice  a  beginner  might  become  sufficiently 
accomplished  to  hold  his  own  with  an  expert  of  some  foreign 
country.  It  is  far  more  probable  that  if  to  his  largely  self- 
acquired  skill  he  was  permitted  to  view  the  champions  of  this 
country  on  the  courts,  if  it  were  made  possible  for  him  to  discuss 
with  them  the  fundamentals  and  intricacies  of  the  game,  his 
chances  in  competition  with  foreign  rivals  would  be  greatly 
enchanced. 

On  just  the  same  basis,  it  is  highly  advisable  that  the  man  in 
charge  of  a  manufacturer's  export  endeavor  be  given  the  oppor- 
tunity to  meet  face  to  face  his  co-workers  in  bringing  to  this 
country  orders  and  profits  which  for  centuries  have  been  Europe's 
portion.  From  a  superficial  viewpoint  it  would  seem  that  the 
published  reports  of  export  gatherings,  the  written  questions  and 
replies  would  leave  no  gap,  but  the  fact  remains  that  no  adequate 
substitute  has  been  found  for  personal  exchange  of  business 
ideas.  In  justice  to  "the  other  man"  self-education  should  be 
carried  to  its  limit  lest  these  personal  meetings  be  a  case  of 
"predigested  food"  easily  absorbed  and  easily  forgotten  because 
the  information  secured  finds  no  secure  lodging-places. 

Capitalizing  Organizations  and  Recorded  Data. — A  yearly 
trip  is  decidedly  worth  while  to  such  organizations,  institutions 
and  governmental  sources  of  information  as  the  National  Asso- 
ciation of  Manufacturers,  Foreign  Department,  the  Philadelphia 
Commercial  Museum,  The  Pan  American  Union  and  the  Bureau 
of  Foreign  and  Domestic  Commerce,  with  the  resultant  oppor- 
tunities for  conferences  with  past-masters  of  one  or  more  phases 
of  foreign  trade. 


THE  EXPORT  MANAGER  71 

In  almost  every  city  of  importance  there  are  springing  up 
informal  groups  of  export  men  who  welcome  the  opportunity 
to  meet  anyone  with  similar  business  ties  in  another  section 
of  the  country.  Through  the  institutions  mentioned  it  is 
always  possible  to  secure  introductions  to  export  managers 
willing  to  exchange  information  and  supply  wherever  possible 
specific  suggestions  in  regard  to  desirable  agents  or  customers,  as 
well  as  hints  in  connection  with  inside  systems. 

While  examples  of  pleasing  foreign  trade  developments,  built 
up  by  totally  differentiating  export  sales  from  its  domestic 
twin,  are  a  matter  of  record,  a  careful  analysis  of  these  successes 
almost  invariably  reveals  the  reason  to  lie  in  the  ability  of  a 
single  man  to  whom  the  export  end  has  been  entrusted.  Com- 
panies who  have  been  unwilling  to  give  the  time  and  attention 
of  their  own  staff  to  other  than  their  domestic  problems  have 
literally  turned  over  the  possibilities  beyond  their  home  bound- 
aries to  an  outside  expert,  usually  on  a  salary  and  commission 
basis,  and  without  fully  realizing  the  fact  they  have  handled 
their  export  business  through  a  selling  agency — which  they  would 
not  consider  wise  in  their  domestic  selling. 

The  Experienced  Export  Manager. — There  are  two  methods 
which  promise  more  rapid  development  than  the  necessarily 
somewhat  slow  education  of  a  minor  employee  which  has  the 
drawback  of  requiring  the  simultaneous  development  of  export 
detail  and  the  far  broader  appreciation  of  policy  basis  and  mer- 
chandising sense.  The  more  obvious  of  the  two  is  to  secure  an 
experienced  export  manager,  paying  the  necessary  price,  and 
initiating  him  into  the  mysteries  of  products  and  policies,  and  in 
return  being  initiated  by  him  into  the  essentials  of  exporting  as 
contrasted  with  domestic  business.  The  advantages  of  this 
method  are  several.  The  experienced  export  manager  can  save 
valuable  time  by  his  knowledge  of  merchandising  as  a  whole 
and  consecjucntly  can  explain  to  every  department  involved  not 
only  the  cooperation  that  is  desirable  but  the  reasons  for  it  and 
the  details  of  it. 

A  case  can  ])e  cited  where  in  less  than  six  months  such  a  man 
had  the  inside  end  of  a  business  (which  had  never  made  a  sought 
sale  outside  this  country)  so  well  trained  to  the  proper  handling  of 
export  orders  that  it  worked  automatically.  This  compares 
favorably  with  the  case  |)i-eviously  mentioned  along  the  same 
lines  which  proved  the  saving  of  time  in  })orrowing  an  able  export 


72  EXPORT  MERCHANDISING 

manager  for  three  months.  In  that  time  he  developed  an  inside 
and  outside  export  plan,  hired  and  trained  a  corps  of  foreign 
salesmen,  started  half-a-dozen  mail  campaigns,  and  as  a  finishing 
touch  secured  his  own  successor  and  left  him  fully  acquainted 
with  the  plans  he  had  worked  out  for  the  first  year. 

Selection  from  Sales  Executive  Staff. — The  less  obvious 
method  is  to  withdraw  from  the  domestic  end  the  sales  manager 
or  an  assistant  sales  manager.  It  is  far  easier  to  replace  such  a 
manager  than  it  is  to  secure  a  full-fledged  and  competent  export 
manager,  and  to  have  him  learn  a  new  line  of  products.  This 
method  has  so  many  points  of  strength  that  it  is  surprising  that 
it  has  not  been  adopted  in  more  cases. 

Manifestly,  the  withdrawal  from  the  purely  domestic  end 
of  the  sales  manager  or  assistant  sales  manager  is  not  the  same 
as  his  withdrawal  from  the  business,  for  he  is  physically  present 
and  free  to  contribute  his  best  thoughts  to  the  upbuilding  of 
the  business  as  a  whole.  From  his  past  knowledge  of  the  busi- 
ness and  its  merchandising  in  general  it  is  decidedly  probable 
that  he  will  consider  in  his  export  endeavors  only  such  sales  plans 
as  will  meet  with  executive  approval. 

Assets  of  the  Domestic  Sales  Executive. — Presumably  because 
it  is  not  obvious,  it  is  often  taken  for  granted  that  export  experi- 
ence and  export  balance  can  only  be  acquired  by  slowly  climbing 
the  ladder  from  invoice  clerk  to  export  manager.  As  a  matter 
of  fact,  any  sales  manager  or  assistant  sales  manager  whose 
mental  processes  are  free  from  ruts,  and  who  is  in  a  position  to 
give  his  whole-hearted  attention  to  exporting  can  master  the  essen- 
tials with  remarkable  rapidity  if  he  will  take  full  advantage  of  the 
opportunities  which  exist.  This  means  more  or  less  travelling 
to  get  in  touch  with  the  personal  side  of  successful  exporting,  and 
visits  to  the  institutional  sources  of  information  to  gain  their 
valuable  advice  and,  above  all,  to  learn  how  the  successful  have 
secured  and  maintain  their  export  sales  volumes. 

To  be  more  specific,  it  is  obvious  that  the  best  training  an 
experienced  domestic  sales  manager  can  have  is  personal  contact 
with  the  men  and  institutions  whose  life  work  it  is  to  foster 
export  sales;  consequently  the  correct  way  to  proceed  is  to  meet 
the  men  in  charge  and  learn  from  them.  There  can  hardly 
be  a  better  first  step  than  to  examine  the  export  magazines, 
note  tlie  advertisers  in  non-competing  lines  whose  domestic 
problems  are  known  to  be  similar  and  to  write  each  outlining 


THE  EXPORT  MANAGER  73 

export  plans  and  socking  suggestions  and  advice.  To  a 
hundred  such  letters  it  would  be  surprising  not  to  receive  at 
least  a  score  of  answers  which  clearly  indicated  the  value  of  a 
personal  acquaintance  with  their  writers. 

Daily  Conferences  as  an  Educational  Method.^A  Western 
firm  solved  a  number  of  difficult  inside  problems  by  arranging 
a  schedule  of  appointments  so  that  the  newly  fledged  export 
man  each  day  had  a  half-hour  conference  with  some  one  depart- 
ment head.  The  most  valuable  results  of  this  definite  schedule 
came  from  the  flood  of  new  ideas  which  any  new  department  head 
insures,  which  were  passed  on  in  such  a  way  that  no  department 
essential  to  export  development  was  neglected. 

TRAINING  THE  EXPORT  MANAGER 

An  excellent  example  of  the  care  that  is  given  today  in  the 
selection  and  training  of  export  managers  is  to  be  found  in  the 
experience  of  the  "North  American  Paint  Co." — a  name  sub- 
stituted by  request  for  the  actual  title  of  the  company.  Frede- 
rick Sanger  in  System  describes  the  method  in  detail : 

Like  nearly  all  large  manufacturing  businesses  in  the  United 
States,  the  North  American  Paint  Co.,  for  a  number  of  years, 
had  enjoyed  a  certain  small  volume  of  unsolicited  export  orders. 
These  were  quality-made  sales  that  could  be  traced  in  man^- 
instances  to  the  fact  that  an  American-trained  engineer  or 
factory  expert  had  the  leading  voice  in  purchases  made  for  some 
foreign  business  corporation  or  public-service  enterprise. 
Whether  a  self-exiled  Yankee  or  a  returned  native,  remembrance 
of  the  covering  or  lasting  properties  of  various  North  American 
products  was  vivid  enough  to  offset  the  trouble  and  delay 
involved  in  buying  the  wanted  specialty  through  some  import 
house. 

There  was  the  master  painter  of  a  Swedish  railway  system,  for 
instance,  a  graduate  of  the  "Jim  Hill"  railroad  school,  who 
yielded  to  his  purchasing  department  on  the  great  majority  of 
paint  and  varnish  matters,  but  insisted  to  the  point  of  rebellion 
upon  the  North  Amei-ican  specialty  paint  for  locomotive  stacks, 
which  resisted  heat  far  better  than  any  German  offering. 

The  Growth  of  Incidental  Export  Sales. — In  Austraha,  again, 
one  of  the  prominent  hardware  dealers  of  Melbourne  had  been 
impressed  by  the  excellence  of  the  North  American  house  paints 


74  EXPORT  MERCHANDISING 

first  soeurod  to  please  an  American  mining  engineer,  and  had 
carried  a  faiil.y  well-balanced  stock  of  these  for  several  years. 
These  instances  were  typical  of  perhaps  a  score  which  indicated 
very  cleai'ly  that  with  the  same  intelligence  applied  to  foreign 
fields  as  that  which  guided  domestic  sales,  a  decidedly  worth- 
while volume  could  be  built  up. 

For  nearly  a  decade  these  export  sales  had  comprised  from  1 
to  5  per  cent  of  the  company's  yearly  total.  From  the  very 
start  of  R.  K.  Morton's  general  managership,  he  had  a  clearly 
defined  policy  towards  foreign  trade,  but  wisely  had  seen  the 
necessity  of  putting  the  Company's  inside  machine  in  condition 
to  handle  a  large  domestic  business  before  endeavoring  to  increase 
its  trade  beyond  the  boundaries  of  the  country.  In  a  recent 
address  before  an  export  gathering  in  Philadelphia,  he  put  for- 
ward the  viewpoint  on  export  trade  which  guided  the  unusual 
training  of  the  North  American's  export  manager,  formerly 
known  as  "Office  Scout  54." 

Service  to  User  the  Test. — "Why  should  it  be  more  wonderful 
to  sell  goods  in  Ecuador  than  in  Montana?"  Mr.  Morton  asked. 
"Besides  the  simplest  of  mechanical  barriers  to  overcome,  what  is 
the  difference  between  selling  in  Vicksburg  and  Valparaiso? 
To  my  mind,  the  real  question  is  not  one  of  boundaries  or  lan- 
guage, but  the  same  old  problem:  Will  our  product  serve  the  user 
adequately  and  will  it  yield  a  satisfactory  profit  to  the  men  who 
must  offer  it  for  retail? 

"Our  own  policy  is  a  simple  one.  We  conceive  the  selling  of 
goods  as  the  bringing  of  what  we  have  to  the  attention  of  those 
who  seem  logical  buyers.  We  anticipate  that  some  changes 
will  be  necessary  in  a  line  which  must  meet  local  climatic 
conditions.  But  it  is  a  part  of  our  business  not  only  to  meet 
requirements,  but  also  to  match  the  competitors'  shades  and 
even  competitors'  prices  right  here  at  home.  Our  investigations 
in  the  foreign  field  make  it  seem  probable  that  meeting  condi- 
tions will  involve  nothing  more  than  using  laboratory  knowledge 
already  gained. 

The  Chemists'  Reaction. — "Take  this  recent  request  for  a 
paint  from  Manchuria,  where  the  temperature  varies  from  40° 
below  to  100°  above,  Fahrenheit.  Our  head  chemist  smiled  when 
he  was  faced  with  this  problem  and  called  it  a  simple  matter,  for 
it,  to  him,  meant  simply  the  solution  of  a  problem  where  the 
factors  were  all  known.     I  do  not  want  to  convey  the  idea  that 


THE  EXPORT  MANAGER  75 

we  have  no  problems  to  face.  We  have  our  share.  In  many 
cases,  we  know  that  we  must  use  our  best  knowledge,  test  the 
paints  and  varnishes  under  actual  service  conditions  and  then 
modify  our  original  formula  to  insure  definite  results.  But  even 
this  is  a  routine  matter.  We  do  not  claim  to  be  100  per  cent 
correct  in  domestic  work  in  new  lines  on  the  first  trial.  Our 
export  policy  can  be  summed  up  in  a  sentence.  Forget  every- 
thing except  courtesy  and  ability." 

Judicial  Attitude  a  Qualification. — Unlike  the  majority,  the 
export  manager,  Woodbridge  Cooper,  was  placed  in  that  picked 
body  of  "office  scouts"  being  trained  for  the  company's  higher 
executive  positions,  not  for  any  striking  interest  in  some  special 
activity  of  the  company,  nor  for  any  suggestion  which  paved 
the  way  to  additional  profits.  The  quality  which  Mr.  Morton 
detected  in  Cooper  and  has  since  capitalized  as  a  dividend  pro- 
ducer, was  his  ability  to  see  both  sides  of  any  question  and  yet 
decide  for  himself  the  relative  merits  of  any  case. 

"Because  selling  goods  abroad  must  be  fundamentally  the 
same  as  selling  goods  at  home  is  no  reason  why  we  should  fondly 
stick  to  a  policy  which  fails  to  recognize  obvious  differences," 
Mr.  Morton  said  recently.  "While  it  is,  of  course,  valuable  in 
domestic  circles  to  be  able  to  see  matters  from  your  customer's 
standpoint,  it  is  only  a  question  of  a  few  days  before  you  hear 
from  Mr.  Customer,  in  case  your  views  do  not  coincide  with  his. 
Whereas,  with  a  foreign  customer,  it  may  be  months,  and  with 
the  passing  of  time  this  disagreement  stretches  the  business 
relation  almost  beyond  the  breaking  point. 

"That  is  why  I  put  Cooper  into  training  for  export  trade.  A 
man  who  instinctively  sees  both  sides  of  every  matter  which 
comes  before  him,  without  heat  or  prejudice,  and  determines  a 
fair  course,  is  doubly  valuable  for  foreign  trade." 

THE  MAKING  OF  A  RIGHT  HAND  MAN 

Mr.  Morton  admits  that  four  years  before  Cooper's  first  active 
step  in  export  sales  his  training  was  started  with  that  object 
in  view.  He  firmly  believes  that  all-around  training  does  not 
necessarily  require  executive  knowledge  or  ability.  He  holds 
strongly  that  outside  training  is  essential.  His  junioi'  executives 
have  outside  training,  both  in  the  sense  of  "going  on  the  road" 
and  working  for  some  other  firm,  in  order  to  secure  the  ability  to 


76  EXPORT  MERCHANDISING 

view  things  without  bUndnesses  which  arc  bound  to  hniit  the 
vision  of  any  purely  inside  worker. 

The  average  man  of  business  will  marvel  more  at  what  is 
omitted  than  at  what  is  included.  At  no  period,  for  example, 
was  Cooper  ever  sent  beyond  the  boundaries  of  the  United  States. 
At  no  time  did  his  studies  include  more  than  a  bare  working 
knowledge  of  Spanish  and  French.  This  working  knowledge, 
too,  was  confined  to  trade  terms  and  was  really  thorough  only  on 
questions  involved  in  hair-breadth  decisions  on  products 
made  by  the  North  American.  At  no  time  did  his  studies  include 
an  analysis  of  the  finer  points  of  foreign  exchange.  At  no  point 
did  they  deal  with  political  conditions  in  other  countries. 

Four  Years  of  Preliminary  Training. — Instead  of  these  seem- 
ingly essential  studies,  Mr.  Morton  insisted  that  Cooper's  four 
years  of  training  follow  this  plan: 

1.  The  North  American  Paint  Company's  policies  and  the  reasons  for 
these 

2.  The  North  American  Paint  Company's  products 

3.  The  fundamentals  of  selling  goods 
■4.  The  fundamentals  of  credits 

o.  The  fundamentals  of  manufacturing 
6.  The  fundamentals  of  transportation. 

In  a  single  paragraph,  it  is  possible  to  show  just  how  IMr. 
Morton  went  about  this  preliminary  ti-aining.  Supplcm<>nting 
his  scout  course.  Cooper  served  a  term  as  clerk  of  the  secontl 
rank  in  every  department  of  the  North  American,  for  periods 
averaging  three  months.  He  was  then  "leased"  to  a  credit 
agency  and  placed  on  the  outside  staff,  which  secures  information 
about  firms  reluctant  to  place  on  file  a  statement  of  their  liabili- 
ties and  assets.  This  increased  his  alread}^  well-developed  power 
of  weighing  conflicting  evidence  and  determining  where  the 
truth  lay.  Then  followed  a  second  "lease"  to  an  export 
commission  house  in  New  York — the  only  obvious  step  in  his 
training — where  he  learned  one  important  thing:  that  "red 
tape,"  supposedly  a  monumental  barrier  to  American  trade 
abroad,  was  a  mere  matter  of  taking  care  of  routine. 

How  to  Rob  the  Unknown. — "When  I  was  in  grammar  school," 
Cooper  explained,  "my  older  brother  seemed  a  marvel  because 
he  could  solve  an  algebraic  equation.  It  seemed  like  wizardry. 
I  knew  that  I  never  could  rise  to  such  heights.  Of  course,  when 
I  got  into  high  school,  I  learned  that  solving  equations  with 


TJIE  EXl'OUT  MANACKIi  77 

letters  instead  of  figures  simply  meant  following  set  rules — rules 
which  long  ago  had  been  put  down  in  black  and  white  in  unmis- 
takable language. 

"When  I  started  with  the  commission  house  the  strange  com- 
binations like  'consular  invoices,'  'minimum  bills  of  lading,' 
'shipping  permits, '  'parcels  receipt, '  'pilferage  risk, '  'particular 
average,'  'custom  house  drawbacks,'  and  even  'lighterage' 
made  me  feel  as  though  I  were  in  a  maze.  It  was  only  a  few 
weeks  before  I  found  they  were  easily  understandable,  were 
carefully  recorded  and  that  it  was  a  question  of  where  to  find 
them,  not  what  to  remember.  Export  red  tape  is  child's  play 
to  any  American  who  can  understand  the  box  score  of  a  base-ball 
game." 

Why  Lawyers  Often  Make  Good  Exporters. — The  next  step 
in  the  development  of  Woodbridge  Cooper  was  his  affiliation 
with  a  law  firm.  "What  makes  a  successful  lawyer?"  Mr. 
Morton  urged.  "I  always  associate  the  legal  fraternity  with 
respect  for  precedent,  willingness  to  dig  down  to  the  bottom 
layer  of  facts  and  ability  to  use  minor  arguments  to  greatest 
advantage.  I  respect  them  for  the  credit  they  give  to  the  intelli- 
gence of  the  other  side,  its  knowledge  of  the  weapons  of  use  and 
its  ability  to  use  them.  Another  question:  What  does  the 
export  manager  really  need?  Isn't  it,  after  all,  a  brain  which 
coml^nes  the  characteristics  of  an  alert  business  man  and  the 
successful  lawyer?  Thus  I  know  that  Cooper  is  head  and 
shoulders  over  even  Pomeroy  and  King,  when  it  comes  to  sizing 
up  the  equity  of  any  merchandising  transaction  and  determining 
where  the  other  fellow  is  going  to  jump." 

He  continued: 

Human  Nature  Study. — "I  will  admit  that  he  is  no  slave  to 
precedent,  despite  his  legal  training.  For  example,  the  knowl- 
edge of  human  nature  he  picked  up  with  the  credit-agency  bunch 
modifies  any  set  rules  which  his  trained  instinct  tells  him  are  ripc^ 
for  an  exception.  Just  last  month,  he  handled  one  case  in  China 
along  a  train  of  purely  legal  thought,  and  everybody  was  pleased. 
A  week  later,  a  case  which  seemed  to  be  identical  came  up  in 
Cuba,  but  he  went  far  afield  from  his  previous  treatment,  be- 
cause he  felt  that  the  particular  customer  would  be  incensed  by  a 
logical  presentation  of  the  matter,  but  would  be  pleased  at  some 
minor  concession  and  feel  victorious  in  the  controversy,  even  in 
yielding  far  more  than  we  could  claim  logically." 


78  EXPORT  MERCHANDISING 

Examples  of  Good  Deduction. — Two  examples  of  Cooper's 
uncanny  divination  of  another's  thoughts  well  suffice  to  prove 
the  correctness  of  his  selection  as  export  manager. 

A  large  hardware  dealer  in  Cape  Town  had  sent  in  a  trial 
order,  as  Cooper's  training  was  in  its  last  quarter.  Later  in  the 
year,  they  placed  a  substantial  order  for  regularly  listed  goods 
and  reported  entire  satisfaction  with  the  initial  shipment.  Only 
a  month  before  Cooper's  real  place  with  the  North  American 
became  known,  the  firm  sent  in  a  request  for  a  package  to  be 
labelled  with  its  name  as  well  as  the  North  American's.  It  was 
in  a  container  entirely  different  and  far  more  expensive  than 
anything  the  North  American  cared  to  use  at  home  or  abroad. 
It  was  apparent  from  the  letter  that  the  senior  partner  was 
responsible  for  the  idea.  It  was  clear,  too,  that  the  package  was 
one  of  those  "brain  children"  in  which  the  parent  was  so  en- 
raptured that  anything  except  complete  acquiescence  in  the  plan 
would  jeopardize  the  growth  of  friendly  relations  with  the  firm. 

Before  presenting  the  proposal  to  Cooper,  Mr.  Morton  gave 
the  matter  a  great  deal  of  thought.  He  had  hoped  that  this 
account  would  demonstrate  to  Cooper  the  possibilities  of  export 
trade,  and  he  was,  therefore,  particularly  anxious  that  it  should 
l)e  turned  over  to  him  at  a  stage  where  its  growth  would  be  an 
incentive  to  persistent  effort  in  every  quarter  of  the  world. 
Mr.  Morton's  solution  was  identical  with  that  of  Cooper — only 
Cooper  gave  his  opinion  in  an  hour,  most  of  which  was  given  over 
to  analysis  of  facts  with  which  Mr.  Morton  had  been  conversant 
before  working  on  the  particular  problem  in  hand. 

The  Letter  That  Surmounted  Obstacles.— With  Mr.  Morton's 
permission,  the  significant  passages  of  the  letter  which  hewed  a 
way  through  the  obstacle  are  quoted  here  as  an  example  of 
applied  policy  remarkable  in  a  man  not  yet  come  to  full  authority'' 
as  an  executive: 

"  It  really  is  not  more  than  once  or  twice  a  year,  despite  our  thousands 
of  customers,  that  we  receive  a  letter  which  gives  us  so  much  pleasure 
as  we  received  from  your  communication  of  the  19th  of  July. 

"Somehow  it  makes  me  feel  as  I  do  after  a  successful  conference  with 
our  department  heads  on  some  suggested  innovation.  Surely  behind 
the  letter  is  far  more  than  your  most  interesting  suggestion  of  a  package 
bearing  both  our  names  and  a  container,  which,  while  it  would  be 
expensive,  for  reasons  which  our  mechanical  department  instances  on 
the  attached  report,  is  most  appealing.  If  you  will  pardon  the  frank 
statement  made  despite  our  few  months'   relationship,  it  shows  an 


THE  EXPORT  MANAGER  79 

interest  and  insiglit  into  the  merchandising  of  paints  which  I  tliought 
no  one  outside  of  the  industry  itself  j)ossessed. 

"Our  experience  abroad  has  convinced  us  that  in  a  staple  line  (such 
as  ours  must  be  classed  as,  despite  its  numerous  specialties)  the  best 
results  come  from  sales  representation  by  every  dealer  in  a  leading 
city  whose  business  standing  in  his  community  is  such  that  he  com- 
mands a  considerable  number  of  clients.  As  with  every  rule,  however 
sound  it  may  be  in  the  great  majority  of  instances,  exceptions  arise  in 
this  one. 

"In  your  case,  due  to  the  interest  in  our  products  and  the  exceptional 
knowledge  you  have  shown,  we  feel  justified  in  voluntarily  offering  you 
the  sales  agency  for  our  products  in  British  South  Africa.  Knowing 
that  you  have  connections  in  every  important  city,  we  take  the  liberty 
of  attaching  to  this  letter  a  suggested  form  of  agreement  for  which 
we  ask  your  careful  consideration.  This,  however,  leads  to  the  con- 
sideration of  your  most  interesting  suggestion  from  an  entirely  different 
angle. 

"Were  you  but  one  of  a  number  of  dealers  handling  our  lines,  our 
inclination  would  be  to  give  some  weight  to  the  elements  which  militate 
against  mutual  satisfaction  in  the  special  line  j^ou  have  suggested  that 
we  manufacture  for  you.  With  the  idea  of  an  exclusive  agency  in  mind, 
however,  we  would  bring  to  your  attention  the  advantages  incident  to 
prompt  shipments,  and  the  increased  profits  coming  from  giving  entire 
attention  to  our  regular  line  and  specialties. 

"On  a  separate  sheet  we  have  noted  some  forty  items  from  our  line 
which  as  our  agents  you  will,  we  think,  find  it  to  your  advantage  to 
feature.  It  is  our  firm  belief  that  your  agency  would  naturally  pre- 
clude a  special  package  such  as  you  suggest. 

"You  will  notice  that  in  the  suggested  form  of  agreement  we  have 
included  a  clause  which  permits  us  to  ask  your  assistance  in  connection 
with  new  lines,  even  when  we  are  aiming  solely  at  domestic  trade.  So 
that  there  may  be  no  misunderstanding  of  this  clause,  we  want  you  to 
know  that  .your  letter  made  it  seem  highly  desirable  for  us  to  have  you 
an  active  if  distant  member  of  our  "Merchandising  Board."  This  in 
order  that  we  might  secure  the  benefit  of  your  plainly-shown  interest 
and  unequalled  ability  in  meeting  competition  at  home  as  well  as 
abroad. 

"You  will  notice  that  the  suggested  form  of  agreement  is  sent  in 
duplicate  and  bears  our  signature,  so  that  in  case  you  should  find  your- 
self in  entire  agreement  with  its  clauses,  you  can  become  our  agents 
without  delay  b}^  adding  your  signature  and  informing  us  of  j-our 
approval. 

"Yours  faithfully, 
"R.  K.  MORTON, 
"General  Manager." 
"The  North  American  Paint  Co." 


80  EXPORT  MERCHANDISING 

The  Perplexing  Abandoned  Shipment. — The  second  example 
again  shows  the  peculiar  kink  in  Cooper's  makeup,  which  enables 
him  to  eliminate  with  one  bold  stroke  what  at  first  glance  seems 
to  be  the  decisive  element  in  an  emergency.  A  month  after  he 
had  taken  over  the  newly  created  export  department,  word  came 
that  a  shipment  invoiced  at  $785,  made  to  a  manufacturer's 
representative  in  Santiago,  Chile,  with  sight  draft  attached  to 
bills  of  lading,  had  been  refused  because  of  the  bankruptcy 
of  the  representative  in  Santiago,  Chile. 

The  shipment  was  largely  of  specialties  for  which  a  ready  sale 
might  be  anticipated  in  almost  any  large,  market  but  no  single 
item  on  the  order  was  listed  in  the  Chilean  market.  The  only 
other  Chilean  customer  of  the  North  American,  also  in  Santiago, 
had  always  confined  his  purchases  to  a  few  staple  numbers  of 
house  paints.  Despite  offers  of  samples  and  sales  assistance, 
this  merchant  had  steadfastly  refused  to  consider  expanding 
his  stock. 

Mr.  Morton  called  Cooper  in  immediately  and  pointed  out 
that,  owing  to  the  delay,  the  storage  charges  and  freight  both 
ways  would  be  in  the  vicinity  of  $300.  This,  with  the  cost  of 
re-labeling  for  the  domestic  market  and  possible  damage  through 
leakage,  might  make  it  advisable  to  al)andon  the  shipment  and 
charge  up  the  order  to  profit  and  loss. 

Turning  Loss  into  Profit. — Cooper  found  his  own  solution, 
which  met,  of  course,  with  Mr.  Morton's  approval.  He  elimi- 
nated the  question  of  loss  by  transferring  the  charge  to  sales 
expense.  He  saw  that  the  salvage  of  that  particular  shipment 
was  absolutely  minor  compared  to  the  possibilities  of  profits  from 
sales  of  the  complete  North  American  line  in  Chile;  and  he  per- 
ceived in  the  abandoned  shipment  a  chance  for  a  gift  (except 
freight  and  duties)  to  the  other  Santiago  customer.  He  figured 
that  if  the  latter  accepted  the  gift,  he  would  be  wise  enough  to 
investigate  the  possibilities  of  marketing  North  American 
specialty  lines  which  he  had  persistently  refused  to  consider. 
As  a  result,  the  Santiago  merchant  developed  a  most  profitable 
market  with  government  departments  and  large  public  service 
corporations;  his  current  purchases  of  specialties  are  almost  three 
times  as  great  as  his  orders  for  the  original  staple  lines. 

In  many  enterprises  it  is  not  possible  to  devote  years  to  the 
training  of  an  export  manager.  In  many  instances  success  has 
followed  even  a  "learn  as  you  go"  type  of  development.     It  is 


THE  EXPORT  MANAGER  81 

entirely  possible  to  build  on  a  less  broad  and  firm  foundation 
than  that  of  "The  North  American  Paint  Co."  But  it  should 
always  be  remembered  that  the  export  manager  is  a  high  execu- 
tive. His  work  requires  high-calibre  planning.  His  field  of 
endeavor  includes  markets  totalling  hundreds  of  millions  of  men, 
women  and  children.  It  is  only  fair  to  the  possibilities  of  his 
work  that  his  training  be  made  worthy  of  its  importance  to  the 
enterprise  as  a  whole. 

Dangers  in  Over  Specialization. — The  export  manager  should 
sink  his  individuality  and  become  a  part  of  the  firm  whose  product 
he  sells.  The  export  expert — the  specialist  who  knows  the 
export  game  from  A  to  Z  (and  he  knows  he  knows  it)  fails  of  com- 
plete achievement  even  at  the  pinnacle  of  his  success.  The 
export  manager,  instead  of  priding  himself  on  being  a  specialist, 
should  resent  such  a  classification  and  by  self-training  broaden 
to  the  far  more  worthy  designation — the  business  man. 

The  first  thing  an  export  manager  should  know  is  his  product. 
Not  limiting  himself  to  a  superficial  or  merely  a  highly  technical 
knowledge,  he  should  know  what  human  need  his  product  meets, 
how  well  it  meets  it,  and  what  other  makers,  whether  in  Kala- 
mazoo or  Paris,  are  doing  to  meet  that  need  better.  He  should 
know  what  value  his  product  offers  its  user;  whether,  for  example, 
it  is  a  minor  part  of  the  user's  expense  or  is  a  predominant  part. 
He  should  know  what  possible  substitutes  exist,  their  strength  and 
weakness  and  the  best  ways — from  first-hand  observation — to 
make  clear  the  disadvantages  of  these  substitutes. 

Knowledge  of  Product. — The  greatest  of  stress  should  be  laid 
on  knowing  every  detail  of  products  to  be  sold.  There  is  a  grow- 
ing feeling  in  some  quarters  that  if  a  man  knows  the  mechanics 
of  securing  foreign  sales  he  can  neglect  all  but  general  principles.  He 
can,  and  still  procure  enough  business  to  surprise  the  unin- 
itiated, but  his  goods  are  half  sold  and  his  markets  half  neglected. 
The  buyers  who  are  the  easiest  to  sell  are  the  easiest  to  lose,  and 
in  the  long  run  the  least  profitable.  The  discriminating  buyer, 
the  man  who  will  base  his  decision  on  the  whole  sales  argument, 
is  the  one  who  stays  sold  until  someone  with  a  better  product  and 
better  proof  earns  his  attention. 

When  House  Policy  Is  all  Important. — The  second  thing  an 
export  manager  should  know  is  the  policy  of  the  firm  he  repre- 
sents. He  must  often  delve  decades  back  in  its  history  to  find 
the  basis  for  a  quantity  discount  or  rules  governing  credits  on 

6 


82  EXI'OKT  MERCHANDISING 

returned  goods.  Ho  should  know  why  certain  hues  were  added 
and  wliy  certain  secMiiingly  logical  lines  have  been  omitted.  He 
should  know  why  the  packing  materials  and  methods  have  been 
adopted  and  the  reasons  for  any  changes.  From  the  policy  of 
enclosing  a  stamped  return  envelope  with  any  letter  asking  the 
slightest  favor  up  to  the  financial  policy,  he  should  seek  always  to 
reason,  test  his  judgment  against  facts  and  broaden  as  he  com- 
prehends the  wonderful  harmony  of  forces  in  a  business  today. 

There  are  a  few  things  which  the  export  manager  should 
know  and  which  no  other  unit  in  the  business  need  know. 
Sources  of  export  information  are  so  obvious  as  being  necessary 
to  the  knowledge  of  any  export  manager  that  it  is  surprising  to 
find  so  many  export  managers  who  are  working  under  the  handi- 
cap of  not  knowing  half  the  assets  which  await  them  free  or  at 
moderate  cost. 

The  export  man  who  has  not  sifted  the  export  journal  field  so 
that  he  knows  the  advantages  of  at  least  five  such  publications, 
knows  something  of  their  personnel  and  field  of  activity,  is  hardly 
in  the  best  position  to  plan  a  well-balanced  campaign.  For 
export  advertising  is  too  powerful  a  force  and  one  so  capable  of 
many  uses  that  the  worth  of  its  mediums  should  be  known  by 
every  export  manager. 

The  Outstanding  Value  of  Geography. — The  export  manager 
should  know  geography.  There  is  much  to  be  learned  from  men 
like  J.  Russell  Smith  of  Columbia  University  and  Edward 
Neville  Vose,  which  is  not  merely  of  broad  interest  but  which 
enters  specifically  into  such  matter-of-fact  duties  as  routing 
salesmen,  planning  sampling  campaigns  and  deciding  agency 
tei-ritorial  limitations. 

The  improvement  in  foreign  sales  methods  in  the  last  ten 
years  has  been  most  pleasing  to  every  one  vitally  interested 
in  our  overseas  trade.  The  export  manager  not  only  should 
have  known,  but  has  known  a  great  deal  about  hiring  and  training 
salesmen,  building  up  business  correspondence,  using  samples 
adroitly  and  knowing  when  to  work  a  market  intensively  and 
when  to  hit  only  the  high  spots.  In  the  last  few  years,  however, 
many  of  the  newcomers  have  failed  to  lay  the  foundations  of  an 
export  business  along  sound  sales  lines,  and  to  these  companies  it 
is  strongly  recommended  that  they  make  sure  that  their  export 
efforts  are  based  on  a  thorough  knowledge  of  the  best  methods 
of  selling  goods  at  home. 


THE  EXPORT  MANAGER  83 

Customs  Tariffs  and  Classifications. — Tlic  export  man,  as  a 
specialist — which  he  imist  he,  of  course,  in  cei'taiii  phases  of  his 
work — should  know  the  fundamental  arguments,  })r()  and  con, 
on  free  trade  and  protective  tariffs.  He  should  know  the  way 
that  duties  work  out  in  practice  and  by  careful  study  learn  to 
ol)tain  the  most  favorable  classifications  for  his  goods.  Inas- 
much as  what  really  interests  a  foreign  merchant  is  the  actual 
cost  to  put  in  his  stock,  he  will  appreciate  the  study  which  results 
in  a  lower  duty,  and  it  is  often  possible  by  change  in  packing, 
a  full  knowledge  of  obscure  clauses  and  profit  by  experimentation, 
to  make  such  reductions  possible.  Out  of  the  scores  of  cases 
which  spring  to  mind,  one  which  made  possible  a  lower  duty  in  a 
country  in  the  Far  East  was  the  declaration  of  a  disinfectant  as 
"liquids — solely  of  mineral  origin."  This  was  a  saving  of  at 
least  $600  to  one  customer  on  one  shipment.  In  another  case  the 
declaration  of  an  office  device  as  "articles  for  educational  pur- 
pose" was  approved  by  the  officials  and  permitted  to  pass  in 
without  duty. 

Knowledge  of  Collateral  Subjects. — The  export  manager  in 
this  capacity  of  specialist  should  know  about  importing,  par- 
ticularly in  its  relation  to  exporting  and  the  relation  of  both  to 
foreign  finance  and  exchange  rates.  He  should  know  every 
form  of  draft  and  every  method  of  financing  export  orders. 
He  should  know  the  original  reasons  for  European  long  credits 
and  the  reasons  which,  even  before  the  War,  led  to  steps  toward 
their  curtailment.  He  should  know  the  folly  of  allowing  a 
customer  to  speculate  with  money  obtained  by  the  sale  of  goods 
and  the  wisdom  of  credit  terms  which  permit  sufficient  sales  to 
finaiHH^  the  purchases,  but  not  sufficient  time  to  gamble  it  away. 

Statistics  and  How  to  Use  Them. — One  thing  that  the  export 
manager  need  not  know  in  his  early  efforts  to  build  up  a  foreign 
sales  volume,  but  which  he  will  need  badly  as  he  covers  markets 
more  carefully,  is  the  way  to  obtain  live  selling  points  from  statis- 
tics. In  the  beginning  these  are  of  interest  in  pointing  out 
existing  markets  and  directing  efforts  through  logical  channels. 
The  statistics  for  this  purpose  are  simple,  showing  the  amount 
in  dollars  imported  by  various  countries  and  the  subdivisions 
showing  the  countries  from  which  these  products  are  imported. 
Later  in  his  career  the  export  manager  should  know  how  to 
analyze  and  reject  and  ultimately  pick  out  a  few  items  of  the 
many  which  will  make  possible  for  him  to  increase  his  sales  within 


84  EXPORT  MERCHANDISING 

countries.  Ho  may  find  it  necessary  to  take  foreign  municipal 
reports  to  picM-es;  to  spend  hours  over  the  many  valuable  volumes 
issued  by  our  Government;  to  determine  the  order  of  sequence 
in  which  markets  should  be  attacked. 

A  joint  campaign  of  a  manufacturer  of  machinery  for  making 
artificial  ice  and  a  manufacturer  of  refrigerators  was  based  on  the 
intelligent  use  of  statistics.  The  municipalities  which  were 
selected  for  the  joint  selling  appeal  were  those  which  statistics 
showed  possessed  the  form  of  government  permitting  the  erection 
of  municipal  plants  where  the  per  capita  wealth  was  high  enough 
to  warrant  rather  large  expenditures.  At  least  a  dozen  other 
kinds  of  statistics,  such  as  average  rain-fall,  average  temperature 
and  humidity,  cost  of  natural  ice  and  existing  sources  of  supply, 
sanitary  regulations  and  local  mortality  tables  from  diseases 
which  might  be  remedied  or  prevented  by  use  of  ice,  all  con- 
tributed in  the  making  up  of  their  unusually  successful  campaign. 

It  is  quite  fashionable  among  the  elite  in  the  export  world  to 
dismiss  statistics  with  a  wave  of  the  hand  and  the  remark, 
"Show  me  a  prospect  and  I'll  sell  him  while  the  other  man  is 
sticking  his  nose  into  figures."  In  this  connection  it  is  pertinent 
to  point  out  that  such  eminent  statisticians  as  0.  P.  Austin 
(formerly  of  the  U.  S.  Government,  later  with  the  National  City 
Bank  of  New  York),  have  shown  ways  to  sales  in  neglected 
markets  for  the  very  products  the  elite  really  sell  well  in  many 
other  parts  of  the  world. 

The  History  of  International  Barter. — The  export  manager 
paints  with  a  broad  brush.  He  must  not  be  a  specialist  only  in 
certain  phases  of  his  work.  While  it  would  not  detract  from  the 
value  of  a  domestic  sales  manager  to  know  the  history  of  the 
world's  leading  trade  markets,  the  reason  for  their  rise  and 
the  causes  of  their  decline,  these  broader  aspects  of  trade  come 
very  close  to  being  essential  knowledge  to  the  export  man. 

When  Bagdad  was  a  center  for  caravans  headed  for  Europe 
and  Venice  was  sending  its  ships  to  every  country  border- 
ing on  the  Mediterranean,  there  were  real  reasons  for  the 
commercial  supremacy  of  these  cities;  but  the  moment  the  all-sea 
route  around  Cape  of  Good  Hope  came  into  being,  they  were 
miles  from  the  greatest  possibilities.  The  alternate  rise  and  fall 
of  Batavia  and  Singapore  teaches  a  lesson  to  every  export  man- 
ager and  makes  possible,  for  example,  a  sounder  granting  of 
agencies  today,  just  as  the  effect  of  the  Suez  Canal  on  trade 


Fig.  5. — E.  &  W.  collars  suit  Mexico.     A  compelling  window  display  in 

Monterey. 


J"iG.  G. — Royal   Worcester   corsets   spell  good  form  in  Melboiirnt 


THE  EXPORT  MAS  ACE  li  85 

routes  and  trade  markets  warranted  safe  prophesies  on  the 
effect  of  the  Panama  Canal. 

The  Past  Reflects  the  Future. — History  is  said  to  repeat  itself. 
There  is  no  reason  wiiy  the  export  manager  should  not  know  the 
beginnings  of  international  commercial  exchange.  Even  today, 
sailing  ships  leave  New  York  loaded  with  manufactured  articles, 
sail  to  little-known  African  coasts  and  exchange  their  cargo  for 
native  products.  The  export  manager  who  is  unaware  of  this 
fact  has  possibly  overlooked  the  one  way  to  extend  his  distribu- 
tion to  the  numerous  small  but,  nevertheless,  worthwhile  markets 
the  names  of  which  dot  the  more  complete  atlases. 

Elemental  forces  will  control  a  sale  of  merchandise  for  centuries 
to  come,  just  as  they  have  in  the  centuries  of  the  past.  The 
methods  of  the  pioneers  (who  knew  more  good  merchandising 
in  their  bartering  than  many  of  us  know  today)  are  just  as 
sound  in  markets  where  the  same  conditions  obtained  in  1922 
as  they  did  in  1790,  or  as  they  were  when  700  per  cent  profits  on 
single  voyages  were  not  unknown.  It  is  by  a  study  of  early 
history  of  exporting  that  the  export  manager  of  today  learns  how 
to  sell  his  goods  in  Java,  in  the  Straits  Settlements,  in  Burma, 
in  Ceylon — and  not  merely  scrapes  the  surface  of  possible  dollar 
profits. 


CHAPTER  IX 
THE  COMBINATION  EXPORT  MANAGER 

"To  the  American  export  manager  who  desires  to  share  the  perils 
and  profits  inherent  in  a  self-conducted  business  I  commend  a 
critical  examination  of  the  possibilities  of  the  combination  export 
manager." — Herbert  B.  Johnson. 

Definition  of  the  Combination  Export  Manager.  Types  of  Organization 
Employing  Combination  Export  Managers.  Differing  Methods  of  Com^ 
pensation  and  Authority.  Webb  Act  Combination  Export  Managers. 
True  Nature  of  Relation  with  Manufacturer.  Problems  of  Organization 
and  Finance.  The  Three  Problems  to  Be  Solved.  Examples  of  Necessary 
Financing  of  Combination  Organization.  Combination  Export  Manager 
Must  Combine  Qualifications  Unneeded  in  Ordiyiary  Expoi't  Managership. 
Obstacles  Which  Must  Be  Overcome.  Building  up  a  Clientele.  Organiza- 
tion Problems. 

The  combination  export  manager  is  such  a  rare  type  to  many 
that  it  is  necessary  to  define  him  clearly  before  attempting  to 
analyze  his  function  and  the  possibilities  of  his  work.  For  the 
purpose  of  this  consideration  he  is  included  both  as  the 
individual  who  acts  as  the  salaried  export  manager  for  others  and 
as  the  individual  who  is  his  own  employer  and  assumes  similar 
duties  on  the  professional  basis  of  fee  for  service  rendered. 

Associated  and  Allied  Organizations. — One  of  the  simplest 
forms  of  the  combination  export  manager  exists  in  cases  where 
allied  companies  have  the  same  sales  organization.  In  a  number 
of  such  cases  the  common  export  manager  hardly  regards 
himself  as  a  combination  export  manager,  for  all  about  him  are 
dividing  their  time  between  the  sales  work  of  the  allied  or 
consolidated  enterprises.  Even  when  two  or  more  entirely 
separate  sets  of  export  records  are  kept,  these  export  managers 
often  seem  hardly  cognizant  of  their  true  title  and,  in  fact,  quite 
commonly  consider  themselves  as  the  export  manager  of  the 
enterprise  that  hired  them  and  deem  the  rest  of  their  work  a 
side  issue. 

Combined  Efforts  in  "One  Industry  Towns." — If  it  is  remem- 
bered always  that  there  are  pi-()l)al)ly  less  than  one  hundred 
combination  (>xport  managers  in  the  United  States,  it  will  not  be 

8() 


THE  COMBINATION  EXPORT  MANAGER  87 

surprising  to  learn  that  there  are  less  than  a  score  in  the  next 
clean-cut  and  recognized  section — export  managers  whose 
employers  sublet  their  services  to  other  manufacturers.  These 
combination  export  managers  are  usually  found  in  the  few 
"one  industry  towns"  wherein  competition  is  intellig(Mit  and 
cooperative  rather  than  suspicious  and  destructive.  The 
other  cases  include  the  sub-letting  of  the  export  manager  in  a 
medium-size  enterprise  to  a  less  experienced  and  intimate  non- 
competitor.  Wherever  this  type  of  combination  export  manager 
is  found,  the  reason  is  either  economy  on  the  part  of  the  original 
employer  or  exceptionally  intimate  relations  between  the  heads 
of  the  interested  exporters — or  both. 

"Webb  Association  Managers." — A  third  type  of  semi- 
combination  export  manager  has  come  into  being  in  connection 
with  combinations  of  competitors  under  the  Webb  Act.  These 
arc  not  included  in  our  total  or  in  our  consideration  l^ecause  their 
function  is  almost  identical  with  the  export  manager  pure  and 
simple  who  has  different  grades  and  prices  on  a  single  type  of 
product  or  group  of  allied  lines. 

THE  INDEPENDENT  COMBINATION  EXPORT  MANAGER 

The  fourth  type  is  the  combination  export  manager  who  sells 
his  own  services  on  a  salary  basis.  This  true  specimen  of  the 
combination  manager  is  of  interest  both  to  manufacturers  of  an 
exportable  product  and  to  export  managers  in  search  of  wider 
range  of  effort  and  greater  compensation.  Each  year  testifies 
to  the  increasing  interest  of  manufacturers  who  need  part-time 
export  managerial  services,  and  of  the  desire  for  export  men  of 
more  or  less  experience  to  increase  their  income  by  serving  as 
export  manager  to  more  than  one  company. 

There  is  a  real  field  for  the  combination  export  managers  of 
this  type.  Hundreds  of  manufacturers  who  are  today  without 
export  sales  or  who  are  blundering  and  floundering  in  attempts 
to  sell  abroad,  without  knowledge  of  how  to  sell  abroad,  need 
just  this  type  of  service.  Scores  of  export  managers  are  desirous 
of  the  greater  income  possil^le  by  serving  two  or  more  masters. 
The  explanation  of  the  extremely  small  number  of  combination 
export  managers  is,  therefore,  not  a  matter  of  supply  and  demand. 
What  is  the  true  explanation? 

Markets  for  Services. — First  of  all,  the  very  ones  who  ne(>d  the 


88  EXPORT  MERCHANDISING 

services  of  a  combination  export  manager  arc  often  entirely 
ignorant  of  their  need.  Countless  hundreds  of  small  and  large 
makers  of  exportable  products,  particularly  in  inland  states  and 
large  cities,  have  not  yet  come  to  the  realization  of  the  insurance 
export  sales  offer  against  severe  losses  in  times  of  domestic 
depression.  Countless  hundreds  of  similarly  situated  enter- 
prises recognize  in  some  degree  the  profits  and  insurance  possible 
through  export  trade,  but  have  been  too  busy  with  domestic 
orders  to  give  adequate  consideration  to  their  own  future  and  its 
best  interests. 

Coupled  with  this  ignorance  of  needs  and  tremendous  demand 
in  domestic  fields,  is  always  the  handicap  of  ignorance  as  to  ways 
and  means  to  secure  part  of  the  services  of  a  combination  export 
manager.  There  are  few  out-and-out  combination  export 
managers.  These  few  now  have,  apparently,  all  the  clients  they 
feel  they  can  fairly  serve.  Surely  the  average  manufacturer, 
particularly  the  type  unfamiliar  with  export  trade,  is  not 
to  be  blamed  if  he  does  not  know  how  to  make  such  a 
suggestion. 

Reasons  for  Scarcity  of  Managers. — There  is  a  fundamental 
reason  why  there  are  not  more  combination  export  managers. 
This  is  the  truth  that  many  who  would  gladly  accept  such  a 
position,  if  offered,  have  only  the  crudest  idea  of  how  to  bring 
such  a  position  into  being.  A  second  reason  is  that  those  who 
seemingly  have  a  fair  idea  how  to  start  to  become  a  combination 
export  manager  are  not  in  a  position  to  finance  themselves  for 
the  initial  year,  in  which  it  is  almost  certain  that  expenditure 
will  be  greater  than  income.  The  third  reason  is  that  export 
managers  who  have  established  their  reputation — the  only  ones, 
by  the  way,  who  can  hope  to  make  connections  quickly — are  the 
ones  who,  from  the  standpoint  of  income,  least  need  to  consider 
combination  export  managership. 

It  is  really  a  duty  as  well  as  a  pleasure  to  throw  the  spot-light 
squarely  on  the  whole  problem.  If  it  results  in  more  combination 
export  managers  who  go  into  the  job  with  their  eyes  wide  open 
to  the  difficulties  as  well  as  the  financial  advantages,  it  will  aid  to 
that  extent  in  increasing  our  total  of  intelligent  exports.  If  it 
once  and  for  all  removes  the  combination  export  managership 
idea  from  the  thoughts  of  those  who  are  now  making  themselves 
uneasy  in  their  present  jobs,  and  docs  this  fairly,  then  it  will 
certainly  add  to  the  efficiency  of  several  hundred  export  managers 


THE  COMBINATION  EXPORT  MANAGER  89 

who,  to  be  frank,  are  wasting  valuable  time  without  decisive 
action. 

Nature  of  Occupation. — ^The  combination  export  manager  is 
in  business  for  himself.  Whether  his  income  is  derived  from 
salaries  or  fees,  he  is  in  business  for  himself.  It  is  imperative 
that  this  be  clearly  understood.  It  means  that  in  addition  to  his 
export  work  for  others  he  is  in  a  purely  domestic  business  for 
himself — the  selling  of  his  own  services  to  domestic  manufac- 
turers. It  is  imperative  that  this  be  realized  and  that  the  risks 
inherent  in  combination  export  managership  be  fully  understood. 

Burdens  Inherent  in  Combination  Work.^ — The  combination 
export  manager  must  assume  the  overhead  expense  of  conducting 
a  business.  He  must  assume  the  cost  of  office  rental,  office 
furniture,  office  supplies,  stenographic  and  files  expenses,  taxes, 
and  the  large  item  of  incidentals.  Directly  or  indirectly,  he 
actually  has,  or  expects  to  have,  others  bear  this  burden.  But 
before  this  happy  condition  is  reached  he  must  first  do  his  domestic 
selling  of  his  services  before  he  can  fairly  eal-n  a  salary  or  charge  a 
fee  for  selling  other  people's  product  abroad.  The  combination 
export  manager  thus  can  be  clearly  seen  to  have  at  the  very 
outset  three  distinct  problems: 

1.  Finances 

2.  Sale  of  his  services 

3.  Sale  of  clients'  products  abroad 

It  is  amazing  to  find  that  the  export  manager  desirous  of 
entering  the  combination  field  has  all  but  ignored  the  two  hard 
parts  of  his  problem — finances  and  sale  of  his  services.  The 
actual  selling  of  even  six  products  abroad  is  the  easiest  part  of 
the  combination  export  manager's  job  in  his  first  years.  The 
hardest  part  of  his  early  work  is  to  keep  down  overhead  expenses 
by  making  the  most  of  himself  and  his  workers — for  it  must  be 
remembered  that  it  is  financial  suicide  for  the  combination  export 
manager  not  to  play  many  roles  in  his  early  years.  He  must  be 
office  manager,  employment  manager,  purchasing  agent,  sales- 
man, and  often  credit  and  collection  manager — among  as  many 
more  types  of  work. 

Small  Capital  as  a  Barrier. — This  is  illustrated  by  a  typical 
incident.  An  export  manager  in  Michigan  made  an  appointment 
with  a  veteran  exporter  and  came  East  over  a  week-end  to 
discuss  his  problems.  He  told  frankly  that  his  salary  as  export 
manager  was  not  adequate  to  meet  his  own  desires  as  to  living 


90  EXPORT  MERCHANDISING 

standards.  He  told  equally  frankly  that,  apart  from  a 
e(iuiiy  in  Liberty  Bonds  and  a  vciy  small  life  insurance  surrender 
value,  he  was  without  assets.  He  had  no  savings  account  except 
one  in  a  child's  name,  and  that  amounted  to  less  than  his  floating 
debt.  He  knew  of  no  one  from  whom  he  could  borrow  even  a 
comparatively  small  sum. 

With  his  finances  as  they  were  he  owed  each  month's  salary  as 
soon  as  it  was  due.  He  could  not  finance  himself  a  month — an 
utterly  inadequate  time — let  alone  the  to-be-expected  period. 
He  owed  it  to  himself  and  to  his  family  to  pile  up  a  reserve  fund 
to  meet  emergencies  rather  than  to  risk  his  Liberty  Bonds  and 
his  child's  savings  when  the  total  of  both  was  ridiculously 
inadequate  to  give  his  hopes  a  chance  of  realization. 

Financial  Resources  Imperative. — This  export  manager  and 
many  others  have  been  astounded  when  it  has  been  proved  to 
them  that  $10,000  is  necessary  to  insure  a  fair  chance  of  success, 
and  that  $15,000  to  $20,000  is  a  far  safer  sum  with  which  to  start. 
So  momentous  in  their  lives  is  their  decision  to  cut  the  ropes  that 
tie  them  to  a  single  employer  that  it  overshadows  all  else.  It  is 
truly  rare  for  export  managers  to  realize,  that  in  addition  to  selling 
their  own  services  they  will  be  called  upon  to  sell  also  the  whole 
idea  of  the  combination  export  manager  and  to  prove  from 
intangibles  that  the  idea  will  stand  every  test. 

POSSIBILITIES  OF  COMBINATION  EXPORT  MANAGERSHIP 

TESTED 

Let  US  examine  the  typical  case  of  John  Jones,  mythical  export 
manager  of  the  equally  mythical  Climax  Products  Co.  His 
salary  is  $4,000.  He  desires  an  income  of  $10,000.  He  is  willing 
to  work  hard  and  to  risk  some  of  the  years  of  his  business  life  to 
increase  his  income  to  this  $10,000  mark.  With  his  knowledge 
of  exporting  (gained  in  his  three  to  ten  years  with  his  enterprise) 
he  is  confident  that  he  can  produce  profits  for  others — several 
others — just  as  he  has  produced  profits  for  one  company. 

The  average  John  Jones  with  this  type  of  idea  in  his  brain 
writes  a  few  letters  to  brother  export  managers  in  whose  judg- 
ment he  has  confidence,  asking  for  their  suggestions.  The 
replies  are  naturally  vague  because  so  httle  actual  knowledge 
exists.  So  John  Jones  drops  the  idea  so  far  as  immediate  action 
is  concerned  but  permits  it  to  remain  in  his  head  to  the  detriment 


THE  COMBINATION  EXPORT  MANAGER  91 

of  his  daily  work.  This  bald  description  exactly  fits  man}'  cases 
within  first-hand  experience.  The  large  niunher  of  export 
managers  who  ])ring  up  the  topic  in  some  form  year  after  year, 
in  comparison  with  th(>  few  who  actually  become  combination 
export  managers,  merely  proves  a  known  fact. 

Visualizing  the  Task. — To  return  to  John  Jones:  What  can 
he  do  to  become  a  ccjmbination  export  manager  with  a  net 
income  of  $10,000  yearly?  First  of  all,  he  must  definitely  visu- 
alize himself  as  a  combination  export  manager.  He  must  capi- 
talize his  vague  impressions  into  clean-cut  mental  photographs 
of  his  own  immediate  future.  John  Jones,  if  he  cannot  produce 
an  available  balance  of  owned  or  borrowed  capital  equivalent  to 
his  normal  expenditures  of  the  previous  year,  should  not  consider 
combination  expoi't  managership.  Living  expenses,  while 
attempting  to  develop  the  combination  idea,  are  greater  rather 
than  less  than  when  acting  for  a  single  enterprise  entirely  apart 
from  the  office  expenses  involved. 

In  all  American  exporting  history  not  ten  men  have  succeeded 
in  their  home  inland  cities  in  netting  an  income  of  $10,000  from 
combination  export  managership.  Succesful  combination  exports 
managers,  with  few  exceptions,  have  attracted  to  their  service 
manufactures  from  distant  cities.  This  points  to  the  early  and 
inevitable  traveling  expenses  in  securing  and  holding  accounts. 
Two  thousand  dollars  is  a  modest  allowance  to  cover  this  item  in 
the  first  year.  This  single  and  usually  overlooked  item  is 
large  because  business  beginnings  in  this  type  of  endeavor  are 
built  as  much  on  personal  presentation  of  the  idea  as  upon  the 
basic  idea  itself. 

Steps  Following  Financing. — It  can  be  assumed  that  John 
Jones  has  available  capital  equal  to  his  previous  year's  normal 
expenses.  What  is  his  next  step?  The  answer  is  simple — to 
build  up  a  sales  campaign  for  his  services.  But  the  carrying  out 
of  this  answer  is  most  difficult.  The  average  acquaintance 
of   the   average   export   manager   is   divided   into   three   parts: 

1.  His  immediate  business  circle 

2.  His  immediate  social  circle 

3.  Other  export  managers 

His  immediate  business  circle  includes  usually  executives 
in  other  local  enterprises  who  are  exporters  or  who  do  not  manu- 
facture   an    exportable    product.     Even    when    they    do    make 


<)2  EXPORT  MERCHANDISING 

a  suitable  product  for  the  purpose  of  John  Jones,  they  may 
have  any  one  of  a  score  of  reasons  which  prevent  their  accepting 
both  John  Jones  and  his  combination  idea. 

The  immediate  social  circle,  as  distinct  from  his  immediate 
business  circle,  averages  to  prove  even  less  productive  of  clients. 
So  the  final  group  for  analysis  is  other  export  managers.  The 
very  fact  that  these  men  are  export  managers  proves  that  their 
companies  are  beyond  the  combination  export  manager  stage. 
It  is  fair  to  assume,  also,  that  their  acquaintance  is  similar  to 
that  of  John  Jones — and  equally  negligible  to  him  as  a  field  for 
clients.  Friends  may  well,  and  frequently  do,  lead  to  single 
salaried  positions.  But  never  have  they  proved  a  royal  road  to 
the  fulfilment  of  the  combination  idea. 

Selling  Services. — John  Jones  must  do  with  himself  what  he 
has  done  with  merchandise — go  out  into  a  strange  and  critical 
world  and  sell  to  strangers.  He  must  do  this  in  a  way  that  will 
convince  strangers  of  a  profit  not  otherwise  obtainable.  He 
must  surmount  the  obstacle  of  an  idea  not  only  new  to  his 
prospective  customers  but  also  entirely  against  their  hard-held 
prejudice  against  the  idea  of  an  employee  whose  services  are 
shared  with  others.  He  must  meet  at  once  and  in  each  case  the 
questions:  "Why  should  we  make  a  combination  arrangement 
in  our  exporting  any  more  than  we  would  in  our  credits,  our 
collections,  our  advertising  or  our  domestic  sales?"  and  "Why 
should  we  have  a  combination  export  manager  unless  we  have 
also  a  combination  domestic  sales  manager?" 

Both  of  these  questions  can  be  fairly  answered — both  should  be 
anticipated.  These  seemingly  sound  queries  can  be  shown  to 
prove  rather  than  disprove  the  worth  of  the  combination  idea 
in  export  fields.  The  export  manager  who  cannot  answer  these 
questions  in  a  way  which  will  gain  confidence  for  his  proposal 
decidedly  is  not  qualified  for  combination  export  managership. 

Prospective  Customers. — The  list  of  prospective  customers  for 
the  combination  export  manager  to  })uild  from  is  the  non-exporter 
of  an  exportable  article  and  the  all  too  modest  exporter  of  an 
exportable  article.  Such  a  list  is  easy  to  compile  by  the  use  of 
trade  directories  and  correspondence.  Frequently  the  very 
companies  easiest  to  secure  as  clients  are  to  be  found  in  the 
newer  advertisers  in  export  journals  published  in  the  United 
States  or  by  enlisting  the  interest  of  chambers  of  commerce  and 
other  trade  organizations.     Advertising  in  magazines  reaching 


THE  COMBINATION  EXPORT  MANAGER  93 

the  managements  of  manufacturing  enterprises  is  effective  when 
intelligently  employed. 

What  of  the  organization  problem?  John  Jones  must  cut 
his  coat  according  to  his  cloth.  But  he  is  a  foolish  John  Jones 
who  writes  long-hand  letters  on  plain  paper  from  a  manifestly 
home  address.  The  wise  John  Jones  establishes  an  office  of  his 
own,  with  one  combined  stenographer  and  file  clerk.  The  wise 
John  Jones  uses  his  own  name  as  John  Jones,  Inc.,  rather  than  a 
fancy  company  name.  The  wise  John  Jones  has  adequate 
stationery  and  printed  enclosures.  The  wise  John  Jones  settles 
down  to  selling  himself  and  the  combination  idea  by  the  exercise 
of  his  highest  ability  to  combine  in  a  campaign  the  spoken  word, 
the  written  word,  the  printed  word,  the  sample  of  his  possible 
service  and  the  testimonial. 

Selling  the  Idea. — The  salesman  is  the  most  powerful  single 
selling  force.  John  Jones  must  be  prepared  to  go  in  person 
promptly  where  he  can  sell  himself  and  his  idea.  But  first  he 
should  show  entire  confidence  in  his  future  by  the  establishment 
of  a  business  office,  with  equipment  and  supplies  neither  elaborate 
nor  inadequate,  but  on  the  sensible  scale  established  by  a  sen- 
sible man. 

On  John  Jones  alone  and  his  ability  to  sell  for  others  while 
he  sells  for  himself  will  rest  his  success  or  his  failure.  For  the 
combination  export  manager  must  hew  to  the  line  in  a  virgin 
forest,  and  thrive  or  starve  according  to  his  own  abilities. 


CHAPTER  X 
SECURING  AND  TRAINING  EXPORT  SALESMEN 

"In  the  long  record  of  international  trade,  the  salesman  enjoys  the 
distinction  of  being  the  best  selling  force,  as  he  was  the  first." 

— Paul  R.  Mahony. 

Definitions  of  a  Salesman.  The  Salesman  as  the  Most  Powerful  Selling 
Force.  As  the  Ke^jstone  of  the  Well-balanced  Export  Cam-paign.  Cost  of 
Export  Travellers.  Modern  Exporting  Demands  More  Salesmen.  Quali- 
fications of  the  Export  Salesman.  Sales  Ability  of  First  Importance.  Needs 
as  a  Linguist  Often  Secondary  to  Clerical  Accuracy.  Knowledge  an  Export 
Salesman  Should  Have.  Importance  of  Greatest  Care  in  Selection  of  Export 
Salesman.  Invariable  Courtesy  a  Requisite.  Example  of  Intensive  Training 
of  an  Export  Salesman. 

There  is  an  excellent  definition  of  a  salesman  that  places  just 
emphasis  on  a  most  important  factor  in  foreign  trade  building. 
It  may  well  start  this  chapter.  It  is  simply  this — "A  salesman 
is  the  man  who  has  the  ability  to  make  the  opportunity  to  present 
his  full  argument  under  favorable  circumstances." 

This  ciuality  differentiates  the  export  salesman  as  a  selling 
force  from  the  selling  forces  which  include  the  advertisement, 
the  letter  and  the  sample.  The  ability  to  choose  a  favorable 
opportunity  to  present  the  full  argument  and  the  ability  to  turn 
an  unfavorable  into  a  favorable  opportunity  are  tremendous 
assets.  They  account  for  sales  made  in  person  at  times  when  the 
allure,  finesse  and  logic  of  other  selling  forces  are  powerless. 

The  Time  Element. — Another  definition  of  the  salesman  is, 
"The  one  selling  force  that  can  answer  unanticipated  questions  on 
the  spot."  This  further  differentiation  of  the  salesman  from 
the  other  three  selling  forces  emphasizes  a  further  reason  for  the 
serious  consideration  of  every  exporter.  For  export  distances 
are  far  greater  than  domestic  tlistances.  Time  which  elapses 
between  sales  effort  and  sales  consummation  costs  profits — 
and  it  requires  only  a  few  questions  to  delay  the  opening  of 
business  relations  for  a  full  year.  This  point  is  particularly 
worth  earnest  thought  when  there  is  doubt  as  to  the  extra  worth 
of  the  export  salesman  over  even  the  most  skilful  use  of  export 
sales  correspondence. 

Though  the  export  salesman  may  l^e  termed  correctly  the 

94 


TRAINING  EXPORT  SALESMEN  95 

most  powerful  single  force  in  export  selling,  this  should  not  for  a 
moment  l)e  taken  to  indicate  that  he  is  a  power  beyond  the  aid 
of  the  other  selling  forces.  The  exact  contrary  is  the  case.  The 
export  salesman  thrives  on  cooperation  and  suffers  from  neglect. 
The  export  salesman  is  at  his  best  when  he  forms  the  keystone 
of  a  well-balanced  sales  campaign.  He  should  be  supported 
by  the  best  of  export  correspondence,  the  best  of  export  adver- 
tising and  the  best  of  export  samples  or  testimonials.  The 
export  salesman  is  not  a  being  apart  and  free  from  the  rules  of 
export  merchandising— he  is  an  integral  part  of  the  structure. 

The  Part  of  the  Salesman. — So  the  part  of  the  export  salesman 
in  export  trade  is  a  leading  part — in  many  businesses  the  leading 
part — but  he  never  should  be  the  one  part.  There  is  no  field  of 
sales  endeavor  in  which  the  salesman  has  won  more  spectacularly, 
nor  failed  more  dismally,  than  in  his  attacks  on  foreign  markets. 
While  the  export  salesman  is  a  powerful  force,  he  is  also  an 
expensive  force — so  expensive  that  he  must  be  an  unusual  man 
and  an  unusual  salesman  to  play  a  profitable  part  in  the  develop- 
ment of  the  foreign  sales  of  his  enterprise. 

Today,  the  export  salesman  will  average  in  daily  expense 
between  $15  and  $30,  entirely  apart  from  entertainment,  com- 
mercial travellers'  license  fees,  excess  baggage  and  duties  on 
samples.  It  is  not  at  all  uncommon,  therefore,  for  $25  a  day 
average  to  be  reached,  which  would  not  include  any  elaborate 
entertainment  nor  even  non-resident  clul)  dues.  Neither  would 
such  a  total  include  any  emergencies  such  as  long  motor  trips 
because  of  disabled  rail  or  water  transportation. 

Based  on  a  $25  a  day  average  (which  should  cover  the  needs  of 
the  usual  American-branded  merchandise  and  include  the  sales- 
man's initial  equipment  of  trunks,  bags,  sample  cases  and  other 
apparatus,  such  as  a  motion  picture  projector  and  film),  the 
export  salesman  represents,  entirely  apart  from  salary,  $7,500 
based  on  a  three  hundred  days'  trip  each  year.  To  this  amount, 
plus  his  salary,  nuist  be  added  the  cost  of  the  sales  efforts  that 
are  essential  in  order  to  make  his  sales  efforts  most  effective. 

Basic  Investment. — But  these  costs  should  not  be  disturbing. 
They  represent  investment,  not  expenditure.  For  the  effect 
of  the  export  salesman's  visit  is  not  ended  with  his  departure  for 
another  city.  There  is  a  long  future  and  a  great  influence  that 
goes  with  the  visits  of  a  personal  representative.  This  is  so 
true  that  in  many  minor  markets  the  export  salesman  can  keep 


9G  EXPORT  MERCHANDISING 

up  a  real  and  vital  friendship  with  his  customers,  even  though 
visiting  them  only  once  in  two  or  three  years.  There  is  insurance 
in  the  visits  of  the  export  salesman.  He  has  eyes.  The  letter, 
the  advertisement  and  the  sample  see  only  their  own  part — and 
that  as  a  selling  part.  The  export  salesman  on  the  ground  can 
correct  errors;  report  the  inroads  of  new  competition;  erase  the 
reasons  for  the  apathy  and  inertia  of  dealers;  and  select  and 
secure  agents  of  real  worth  in  the  present  as  compared  to  those 
still  living  on  the  one-time  international  reputation. 

The  part  of  the  export  salesman  is  limited  only  by  the  ability 
of  the  salesman.  He  can  be,  and  often  is,  the  close  advisor  of  his 
customers.  They  look  to  him  not  only  for  prices  and  selling 
plans  for  his  own  products,  but  seek  his  advice  in  selling  of  other 
allied  and  unallied  products.  Merchants  are  keen  to  know  the 
latest  and  best  in  store  display,  in  store  layout,  in  price  tendencies 
on  all  lines.  Often  the  export  salesman  becomes  an  indispensable 
part  of  the  foreign  merchant's  business  through  his  suggestions 
for  its  conduct  and  expansion. 

Why  Salesmen  Are  Sent  Abroad. — More  and  more  the  experi- 
enced exporters  are  sending  salesmen  to  the  lesser  as  well  as  the 
greater  markets  of  the  world.  Naturally,  they  pave  the  way  for 
the  salesman  by  correct  use  of  correspondence,  and  naturally 
these  lesser  but  valuable  markets  are  not  visited  with  the  same 
frequency  as  are  the  larger  markets.  The  reason  for  this  tend- 
ency to  cover  small  markets  by  salesmen  is  the  comparative  ease 
with  which  these  markets  can  be  all  but  monopolized.  So  in 
city  after  city  where  the  average  sales  would  not  justify  a  sales- 
man's visit  if  the  total  purchases  were  shared  with  the  usual 
competitors,  the  total  sales  which  are  possible  for  the  salesman  to 
secure  make  these  visits  pay  high  dividends.  There  was  a 
time  when  a  certain  island  was  not  visited  except  by  one  salesman 
in  twenty  who  came  within  1,000  miles  of  it.  That  one  salesman 
secured  and  has  held  90  per  cent  of  its  total  purchases  in  his  line 
and  for  other  lines  which  he  has  since  added. 

The  part  of  the  export  salesman  is  so  full  of  possibilities, 
and  the  expense  of  personal  representation  so  great,  that  only 
with  cooperation  and  careful  planning  under  a  good  executive 
should  this  method  of  selling  be  considered.  Properly  selected, 
well-trained  and  adequately  supported,  the  largest  dividends  in 
exporting  will  be  found  through  the  direct  and  personal  repre- 
sentation of  the  export  traveller. 


TRAINING  EXPORT  SALESMEN  \)7 

QUALIFICATIONS  OF  THE  EXPORT  SALESMAN 

"Vour  export  salesman  must  be  the  living  exemplification  of  all 
that's  good  in  your  business." — Herbert  B.  Johnson. 

It  is  surprising  as  well  as  amusing  to  read  of  the  qualifications 
of  the  export  salesman  as  they  have  been  portrayed  by  the 
amateur  and  the  theorist.  One  recent  listing  of  qualifications 
included  every  virtue  and  every  ability  that  its  author  could 
imagine.  But  it  omitted  the  first  and  cardinal  qualification,  for, 
first  of  all,  the  export  salesman  must  be  a  man  who  can  sell  both 
merchandise  and  ideas.  That  qualification  is  one  in  whose 
absence  no  amount  of  substitutes  can  prevail.  Export  travelers 
should  not  be  sent  out  to  make  profits  because  they  are  linguists, 
observers,  diplomats,  orators  or  two-legged  encyclopedias  full  of 
information  on  the  markets  of  the  world.  The  export  salesman's 
first  qualification  is  sales  ability. 

It  is  not  enough  for  the  export  salesman  merely  to  sell  mer- 
chandise. The  fundamental  difference  between  American  selling 
methods  and  those  of  our  European  competitors  is,  that  we  move 
the  goods  from  the  foreign  merchant's  shelves  while,  as  a  whole 
and  with  startlingly  few  exceptions,  the  European  maker  rests 
content  when  he  has  filled  instead  of  emptied  the  merchant's 
shelves. 

Modern  Sales  Ability  Imperative. — So  the  export  salesman 
must  be  able  to  sell  ideas  as  well  as  merchandise.  He  must  be 
able  to  sell  the  foreign  merchant  the  idea  of  cooperation  in 
selling  and  secure  his  partnership  in  selling  campaigns  that  will 
move  the  merchant's  stocks,  increase  both  demand  and  turnover 
and  thus  increase  the  profits  of  both  maker  and  merchant.  These 
methods  are  the  despair  of  our  European  competitors  because 
they  make  low  first  price  a  detriment  instead  of  benefit  to  the 
merchant.  These  methods  explain,  far  more  than  any  other 
claims  for  superior  quality,  the  reason  why  foreign  merchants 
can  profitably  buy  American  merchandise  priced  far  above  the 
European  levels  of  the  pre-war  years. 

The  export  salesman  should  speak  the  commercial  language 
of  the  countries  he  visits — otherwise  he  has  to  overcome  the 
artificial  obstacle  which  he  has  needlessly  placed  between  himself 
and  the  sale.  He  need  not,  except  in  cases  of  most  unusual 
products,  speak  Chinese  in  China  or  Japanese  in  Japan,  for  he 
^^•ill  find  English  a  commercial  language  in  both  these  markets. 


98  EXPORT  MERCHANDISING 

and  wlicrc  it  is  not  a  commercial  language  he  will  find  the  use  of  an 
interpreter  free  from  the  insult  it  is  in  Spanish-speaking  countries. 

Naturally,  in  the  two  Americas  he  will  need  only  four  lang- 
uages— English,  Spanish,  Portuguese  for  Brazil  and  French  for 
Haiti  and  French  Guiana.  Dutch  may  have  an  added  value  in 
Curacao  and  Dutch  Guiana,  as  are  German  and  Italian  with 
merchants  of  these  nationalities  in  Southern  Brazil  and  Argentina 
in  particular.  There  can  be  no  argument  on  the  score  of  use  of 
languages.  No  linguist  who  is  not  a  salesman  should  be  sent 
abroad,  and  no  salesman  should  be  sent  out  who  is  not  equipped 
to  present  his  full  argument  in  the  commercial  language  of  the 
countries  he  is  to  visit. 

The  Good  Clerk. — The  export  salesman  should  be  a  good  clerk. 
This  qualification  should  be  known  to  exist  by  proof  positive. 
Export  errors  are  costly,  export  delays  are  costly  and  export 
guesses  are  costly.  The  orders  which  the  export  salesman  mails 
should  be  as  correct  in  every  detail  as  an  export  agency  contract. 
They  should  leave  nothing  to  the  imagination — they  should  be 
complete  to  the  crossing  of  every  t  and  to  the  dotting  of  every  i. 
The  use  of  portable  typewriters  by  export  salesmen  is  highly  to 
be  recommended.  Many  hours  of  search  over  past  records  and 
many  costly  cables  can  be  avoided  by  their  use.  It  will  usually 
be  found  that  better  and  more  complete  reports  follow  the  use  of 
the  typewriter  by  export  salesmen. 

The  carbon  copies  of  orders  left  with  merchants  are  invariably 
better  if  made  with  typewritten  impressions,  and  this  applies 
also  to  the  "follow  copies"  of  orders  which  the  salesman  should 
invariably  send  by  the  first  steamer  sailing  after  the  one  carrying 
the  original  order.  The  postage  involved  is  trivial  compared  to 
the  loss  inevitable  through  the  failure  of  even  a  single  original 
order  to  arrive. 

The  Necessity  for  Clerical  Training. — The  export  salesman 
should  be  trained  most  carefully  as  a  clerk.  If  he  proves  incap- 
able of  accurate,  readable  and  complete  reports  he  should  never 
be  allowed  on  the  export  road,  even  though  he  be  a  good  salesman 
in  other  respects.  This  may  seem  an  arbitrary  statement,  but 
veteran  export  managers  will  endorse  it  with  feeling. 

A  single  example  shows  clearly  the  reason  why  a  salesman 
is  not  a  safe  export  salesman  unless  he  is  a  good  clerk.  One  of 
the  most  important  wholesalers  in  Valparaiso  had  been  sought 
for  several  years  by  an  American  manufacturing  exporter.     To 


TRAINING  EXPORT  SALESMEN  99 

his  delight  he  received  a  su})stantial  trial  order  ainounting  to 
several  thousand  dollars'  worth  of  their  most  profitable  lines, 
and  with  it  a  letter  from  their  salesman  urging  that  it  be  given 
preference  and  attention,  since,  as  he  wrote,  "If  everything  goes 
well  with  this  order  he  will  at  once  place  a  real  order  of  not  less 
than  $20,000,  and  from  then  on  will  feature  our  lines  and  close 
out  his  stock  of  English  and  French  competitive  products.  Be 
sure  not  to  slip  up  on  delivery,  as  this  means  a  lot  on  this  first 
order." 

As  the  standing  of  this  Valparaiso  merchant  had  been  investi- 
gated and  was  ample  for  several  hundred  thousand  dollars  there 
was  no  necessity  for  delay  from  credit  reasons.  The  terms  of 
sale  as  entered  by  the  salesman  were,  "Will  pay  less  2  per  cent 
cash  on  arrival  of  goods."  The  order  was  entered  promptly;  by 
good  fortune  shipping  space  was  available,  and  within  two  weeks 
the  order  went  forward  with  thirty  day  sight  draft,  bank 
instructed  to  release  papers  on  payment,  draft  not  to  be  pre- 
sented until  arrival  of  goods.  This,  the  American  manufacturer 
felt,  would  prove  to  the  Valparaiso  merchant  a  willingness  to 
go  further  than  a  straight  sight  draft  or  an  "on  arrival"  draft. 

The  Cost  of  Incomplete  Notations. — But  imagine  the  exporting 
manufacturer's  surprise  and  horror  when  the  shipment  was 
refused  and  with  only  the  comment  "Says  he  never  accepts 
drafts,  and  so  advised  your  representative."  When  the  order 
files  and  the  original  order  were  compared  it  was  seen  that  the 
salesman  in  writing  "  Will  pay  less  2  per  cent  on  arrival  of  goods  " 
had  merely  quoted  the  merchant  without  a  word  of  warning.  As 
this  manufacturer's  terms  were  invariably  "sixty  day  sight  draft 
attached  to  documents  D/A"  or  "Sight  draft  attached  to  docu- 
ments less  2  per  cent, "  the  costly  error  was  entirely  the  fault  of 
the  salesman. 

To  satisfy  the  curious,  the  account  was  saved  as  the  result  of  a 
$100  cable  in  pure  Spanish,  written  in  collaboration  by  a  capable 
export  manager  and  an  expert  linguist.  But  that  one  piece  of 
poor  clerical  work  almost  cost  an  account  impossil^lc  to  duplicate 
on  the  west  coast  of  South  America. 

Knowledge  of  Export  Practice  Essential. — The  good  export 
salesman  must  know  and  understand  the  fundamentals  of  export 
selling.  He  must  know  how  to  cooperate  with  the  credit  depart- 
ment. He  must  be  entirely  familiar  with  drafts,  including  the 
rarer  forms,  and  he  must  know  how,  when  and  where  to  use  them. 


lOO  EXPORT  MERCHANDISING 

He  must  he  able,  for  example,  to  see  how  Rio,  with  its  customs 
complications  and  slow  clearances,  differs  from  other  cities.  He 
must  be  able  to  arrange  on  the  spot  the  best  method  of  handling 
the  unusual  situations  which  Rio  offers  as  an  illustration. 

The  export  salesman  differs  from  his  domestic  brother  in  many 
cases  because  of  the  difference  between  domestic  and  foreign 
sales  policy.  An  export  manufacturer  may,  for  good  reasons, 
have  no  agent  in  the  United  States  and  yet,  for  equally  good 
reasons,  have  agents  abroad.  Such  a  condition — and  it  is  by  no 
means  uncommon — necessitates  that  quality  in  a  salesman  which 
makes  him  capable  of  aiding  in  the  determination  of  selling  policy 
for  whole  political  units,  weighing  the  advantages  and  disadvant- 
ages of  agency  treatment,  suggesting  agents  and  territorial  and 
sales  limitations,  and  after  agents  have  been  appointed,  cooperat- 
ing with  them  and  with  their  salesmen  in  nation-wide  sales 
development. 

SUPPORTING  THE  EXPORT  SALESMAN 

"Mr.  Carnegie  got  rich  because  he  had  working  for  him  men  who 
were  in  the  right  place." — J.  Russell  Smith. 

There  is  a  vast  difference  between  recording  the  assets  of  good 
export  salesmen  (and  pointing  out  the  necessity  of  these  assets) 
and  securing  men  who  possess  these  assets.  It  is  important  to 
select  wisely  salesmen  who  will  rightly  represent  the  enterprise 
that  hires  them  in  a  small  portion  of  a  domestic  city.  Yet  such 
a  man  sees  but  a  few  customers.  He  is  under  the  eye  of  the 
sales  department.  His  errors,  if  not  quickly  corrected,  result 
in  dismissal  before  serious  damage  has  been  caused. 

Securing  the  Right  Man. — The  selection  of  the  export  salesman 
is  a  matter  of  graver  importance.  His  cost  is  greater,  his  respon- 
sibilities decidedly  greater  and  his  chance  for  irreparable 
damage  all  but  unlimited.  A  poorly  selected  export  salesman 
recently  cost  an  American  manufacturer  $250,000  in  damages 
and  the  loss  of  at  least  five  years'  time  in  the  development  of  five 
of  the  most  important  markets  of  the  world. 

In  the  selection  of  the  export  salesman  (assuming  good 
character  and  good  health  to  exist)  the  first  problem  to  solve  is 
that  of  the  selling  ability  of  the  man.  If  he  has  a  business  expe- 
rience the  first  question  should  be,  "Can  you  sell  goods?" 
and  the  second,  ''Who  says  so?"     If  the  applicant  has  not  had 


TRAINING  EXPORT  SALESMEN  101 

experience  in  selling  merchandise,  it  is  well  to  watch  closely  his 
shown  ability  to  sell  his  own  services.  His  ability  in  selling  his 
own  services  will  give  at  least  a  suggestion  of  the  impression  he 
will  make  on  those  to  whom  he  later  desires  to  sell  merchandise. 
While  some  men  are  so  modest  that  they  are  constitutionally 
unable  to  present  their  own  case  to  advantage,  the  great  majority 
who  have  this  fault  are  also  constitutionally  unable  to  sell  buyers 
who  are  content  with  their  existing  sources  of  supply. 

The  Importance  of  Reference  Investigations. — References 
should  be  requested  and  should  be  investigated  with  painstaking 
care.  Every  year  of  the  prospective  salesman's  career,  from 
infancy,  should  be  studied.  In  the  sequence  there  should  be  no 
missing  years  left  without  adequate  explanation.  Particularly 
should  more  than  the  usual  formal  reference  inquir}^  letters  be 
written.  Every  effort  should  be  made  to  discover  every  fact 
in  the  applicant's  past  business  life  and  in  his  educational  years. 
The  testimony  of  individuals  unknown  to  the  manufacturer 
should  not  be  accepted  without  further  investigation,  and  no 
statements  should  be  on  evidence  that  would  not  be  considered 
as  evidence  by  the  credit  department. 

In  a  subsequent  chapter  devoted  to  the  preparation  of  the 
export  salesman  for  the  field,  the  matter  of  bonding  is  discussed. 
But  bonding  has  far  more  than  an  insurance  value.  More  and 
more  manufacturing  exporters  make  it  a  requirement  for  appli- 
cants for  positions  as  export  salesmen  to  fill  out  bond  applications 
at  the  very  start.  This  transfers  to  the  impersonal  bonding 
company  the  task  of  asking  searching  questions  which  would  seem 
sharply  personal  if  asked  by  the  manufacturer. 

Emphasis  is  placed  on  the  need  of  care  with  references  because 
of  several  unfortunate  connections  which  have  resulted  from 
lack  of  the  same  care  with  export  salesmen  that  would  be  taken 
in  the  case  of  domestic  employees  who  were  to  assume  similar 
positions  of  responsibility.  The  one  test  the  few  dishonest 
export  travelers  cannot  defeat  is  the  reference  test.  And  this 
test  must  be  most  thorough  or  it  is  no  test.  The  enterprise 
that  accepts  a  favorable  reply  to  a  formal  reference  letter  as 
evidence  is  particularly  easy  to  deceive. 

Ability  to  Understand  and  Remember  Instructions. — If 
satisfied  of  positive  reaction  indicating  the  probabiiit}^  of  selling 
ability  in  the  prospective  export  salesman,  the  company's  next 
step  is  so  o])vious  tliat  it  is  scOdoni   taken.     It  is  to  test  tlie 


102  EXPORT  MERCHANDISING 

ability  of  the  ;ipi)licant  to  understand,  rcnicniljcr  and  act  upon 
verbal  and  written  instructions.  This  ability  must  not  be 
taken  for  granted.  It  is,  in  fact,  conspicuously  absent  from  some 
eminent  business  men.  But  the  distances  that  soon  come 
between  the  export  sales  executive  and  the  export  salesman,  and 
the  importance  of  the  tasks  of  the  salesman,  make  imperative 
the  ability  to  understand,  remember  and  act  upon  the  instruc- 
tions which  are  the  result  of  many  and  costly  years  of  experience. 
One  good  export  manager  refuses  to  consider  seriously  any 
applicant  who  fails  to  pass  a  90  per  cent  memory  test. 

Courtesy  in  International  Trade. — Courtesy  is  an  all-important 
(luality  in  an  export  salesman,  whether  his  territory  be  South 
Africa  or  China.  The  day  of  the  over-forceful  salesman,  if  it 
ever  truly  existed,  has  passed.  Courtesy  is  easily  tested  in  a 
prospective  salesman  by  giving  him  every  opportunity  to  meet 
others  of  rank  higher  and  lower  than  the  export  executive  and 
watching  him  closely  in  his  unguarded  moments.  If  he  takes 
the  slightest  advantage  of  any  employee  or  if  in  his  unguarded 
moments  he  shows  that  he  regards  courtesy  as  a  veneer  to  cover 
an  unworthy  base,  his  name  should  be  crossed  from  the  list. 
There  is  one  traveler  for  several  American  houses  who  is  cordially 
hated  by  every  clerk  in  Australia  in  the  houses  that  carry  his 
lines.  He  is  studiously  careful  of  his  tongue  and  manners  when 
with  proprietors,  but  he  treats  the  very  men  who  sell  his  goods 
over  the  counter  and  on  the  road  as  inferior  beings.  As  a  result, 
his  lines  are  losing  ground.  Even  the  buyers  who  like  him  are 
forced  to  point  to  the  stocks  they  have  on  hand  and  which  are 
not  moving  from  their  shelves. 

The  best  account  in  Mexico  was  lost  to  an  American  manufac- 
turer because  its  salesman  was  insulting  to  a  man  he  thought  to 
be  a  porter,  but  who  was  in  reality  the  silent  partner  of  the  large 
hardware  corporation.  Orders  have  been  issued  that  not  one 
dollar's  worth  of  products  of  this  house  shall  ever  be  purchased. 
The  incident  happened  eleven  years  ago,  and  the  orders  are  still 
in  force. 

Personality. — In  analyzing  the  successful  export  salesman, 
there  is  made  prominent  the  wisdom  of  selecting  salesmen  who 
have  highly  developed  bumps  of  friendliness — who  make  friends 
naturally  and  hold  them  for  life.  It  is  such  an  important  and 
desirable  asset  that  in  selecting  the  export  salesman  it  is  wise 
to  seek  out  the  half-dozen  closest  personal  friends  of  the  applicant 


TRAINING  EXPORT  SALESMEN  103 

and,  where  possible,  to  interview  them  personally.  Many  times 
in  the  history  of  American  exporting,  accounts  have  been  saved 
in  the  face  of  repeated  errors  of  the  exporter  l)ecause  of  the 
importer's  friendship  for  the  salesman  and  his  reluctance  to 
change  sources  of  supply  and  mar  that  friendship. 

In  selecting  export  salesmen  it  is  always  wise  to  use  the  same 
type  of  care  that  should  be  used  in  selecting  a  business  partner. 

TRAINING  THE  EXPORT  SALESMAN 

"In  the  old  days  tho  foreign  traveler  was  given  a  catalog  and  a 
blessing.     Old  as  I  am,  I  like  the  new  way  better." 

— John  Chapman. 

The  prospective  export  salesman  should  pass  a  field  test  here 
in  the  United  States.  If  he  cannot  sell  goods  at  home,  it  is  unfair 
to  assume  that  he  will  prosper  abroad.  Unless  the  applicant 
has  a  long  and  proved  record  in  foreign  fields  and  an  export 
acquaintance  with  dealers,  this  test  should  never  be  omitted. 
It  will  end  quickly  the  aspirant  who  has  had  a  two  years'  course  in 
Spanish  and  wants  to  travel  in  South  America  on  this  slim 
asset.  It  will  save  for  better  fields  the  over-ambitious  export 
shipping  clerk  with  the  awe-inspiring  vocabulary  of  export 
phrases  and  terminology.  It  will  make  or  break  the  tourist  who 
was  so  deeply  impressed  with  a  winter  in  Bermuda  that  he 
has  dedicated  his  life  to  foreign  trade. 

It  may  prove  of  interest  to  follow,  step  by  step,  the  training 
of  an  export  salesman  who  today  in  his  chosen  Latin-American 
field  is  a  success.  He  has,  at  the  age  of  twenty,  six  made  five  long 
Latin- American  trips.  He  enjoys  the  respect  and  the  friendship 
of  the  most  important  dealers  in  the  cities  which  he  visits. 

An  Example  Worth  Study. — When  he  presented  in  person 
his  request  for  a  position  as  export  salesman,  the  export  executive 
was  only  a  recent  arrival  in  New  York  City,  and  consequently 
had  many  matters  which  demanded  his  immediate  attention. 
He  was  attracted  to  the  applicant,  but  in  all  fairness  was  forced 
to  tell  him  that  other  work  would  prevent  consideration  of  the 
addition  of  further  export  salesmen  for  at  least  six  months.  "  That 
will  be  September  first,"  the  applicant  replied.  "All  rigiit,  I'll 
be  here  then." 

The  export  manager  certainlj^  was  surprised  at  this  reply. 
"But  what  are  you  going  to  do  in  the  meantime?     Remember,  I 


104  EXPORT  MERCHANDISING 

didn't  offer  you  a  position  to  start  in  with  us  in  six  months." 
The  salesman — for  he  has  proved  his  right  to  the  name — 
explained,  "I'll  get  a  place  in  some  export  commission  house 
down-town.  During  the  next  six  months  I'll  brush  up  my  Spanish 
and  find  out  more  about  draft  usage." 

He  did  not  appear  at  the  export  manager's  office  again  until 
September  first.  When  he  appeared  (after  making  an  appoint- 
ment by  telephone)  the  two  came  to  a  complete  understanding. 
It  was  agreed  that  the  applicant  was  to  be  given  a  full  and  fair 
chance  to  become  worth}^  to  cover  that  part  of  South  America 
bounded  by  Para  on  the  East  Coast  and  by  Guayaquil  on  the 
West  Coast — which  includes  Brazil,  Uruguay,  Paraguay,  Argen- 
tine, Chile,  Peru,  Bolivia  and  Ecuador — and  that,  as  oppor- 
tunity presented  itself,  the  interior  cities  of  these  countries  as 
well  as  the  usual  port  cities  were  to  be  visited. 

The  Four  Tests. — But  before  this  territory  was  to  be  assigned, 
the  new  salesman  was  to  pass  through  four  stages  of  development. 
He  was  to  prove  his  ability  to — 

1.  Sell  goods  in  the  United  States 

2.  Understand  the  selling  and  other  policies  of  the  company 

3.  Sell  consumers  in  nearb.y  Latin-America  in  behalf  of  the  trade 

4.  Sell  goods  in  a  Latin-American  country  not  previously  visited  by  a 
direct  representative  of  the  company. 

The  first  assignment  of  the  new  salesman  was  to  collect  overdue 
accounts  on  the  East  Side  of  New  York.  This  selection  was 
made  to  show  in  an  unmistakable  way  the  costliness  of  goods 
poorly  sold,  to  explain  by  living  examples  the  need  for  limitation 
of  credit  and  for  soundness  in  collection  method  and,  above  all, 
to  prove  to  the  salesman  how  poorly  the  average  retailer  ranks 
as  a  selhng  force.  As  the  export  manager  hoped,  the  salesman 
proved  to  be  a  good  collector — even  collecting  one  account  that 
had  been  given  up  as  hopeless — and  his  comments  indicated 
clearly  that  he  recognized  the  true  causes  behind  the  slowness 
of  payments. 

In  the  work  of  the  New  York  City  salesmen,  Staten  Island  was 
assigned  to  the  salesman  who  covered  Brooklyn  and  several 
other  Long  Island  cities.  The  sales  manager  knew  that  few 
orders  were  secured  from  Staten  Island  and  to  serve  a  dual  pur- 
pose, the  new  export  salesman  was  given  Dun,  Bradstreet  and 
a  directory  of  Staten  Island.  He  was  told  to  list  prospective 
customers  and  prepare  himself  to  make  his  first  visits  as  a  sales- 


TRAINING  EXPORT  SALESMEN  105 

uuiii.  He  had,  of  course,  by  study  of  catalogs,  price  lists  and 
samples,  and  numerous  conferences  with  the  export  and  sales 
manager,  become  familiar  with  products,  prices  and  terms. 

A  Proving  Ground  at  Home. — In  two  days  the  new  salesman 
opened  six  new  accounts  on  Staten  Island,  laid  the  foundation 
for  four  more,  and  proved  that  the  territory  had  previously  been 
neglected.  It  is  interesting  to  note  that  while  he  made  only  one 
other  visit  to  Staten  Island,  for  three  years  after  he  was  engaged  as 
foreign  salesman,  the  Staten  Island  dealers,  in  telephoning  orders, 
would  ask  for  him  by  name — although  he  left  no  husiness  card 
when  he  called. 

Accuracy  in  clerical  work  was  insisted  upon  from  the  start, 
as  well  as  a  thorough  knowledge  of  the  products  to  be  sold. 
This  knowledge  did  not  consist  merely  of  careful  study  of  an 
illustrated  catalog.  It  did  not  end  with  a  knowledge  of  the 
materials  used,  processes  employed  and  methods  of  assembling. 
It  included  the  packing,  including  export  packing,  and  the  rea- 
sons for  the  method  of  packing.  It  included  the  physical  handling 
of  each  one  of  several  hundred  items.  It  included  the  analysis 
of  selling  arguments,  both  those  adopted  for  use  with  the  con- 
sumer and  with  the  dealer.  It  included  a  full  knowledge  of 
export  advertising  material,  and  the  best  ways  for  the  foreign 
merchant  to  use  it. 

Study  of  Markets. — Then  came  the  stage  of  intensive  study  of 
markets  to  be  visited.  These  studies  were  made  at  the  Bureau 
of  Foreign  and  Domestic  Commerce  and  Pan  American  Union 
in  Washington,  and  at  the  Commercial  Museum  in  Philadelphia. 
The  finishing  touches  were  added  at  the  National  Association  of 
Manufacturers  in  New  York  City.  The  export  journals  pub- 
lished in  this  country  were  also  used  in  this  close  study  of  markets 
and  their  peculiarities. 

Through  the  illness  of  one  of  this  manufacturer's  salesmen  the 
opportunity  was  afforded  for  the  embryo  export  salesman  to 
call  on  established  trade  connections  in  several  states,  to  perfect 
himself  in  the  sale  of  a  newly-added  specialty  and  to  come  in 
contact  with  several  scores  of  merchants,  learning  from  them  at 
first-hand  of  their  frank  opinion  of  the  company  and  its  policies 
and  practices. 

This  trip  ended  the  first  stage  of  the  salesman's  training.  He 
had  demonstrated  that  he  could  sell  goods  in  the  United  States 
in  clean-cut  fashion.     Almost  simultaneously  the  second  stage 


lOG  EXPORT  MERCHANDISING 

ended,  because  in  a  few  short  weeks  of  test  he  proved  to  have 
mastered  the  company's  selhng,  credit,  advertising,  adjustment 
and  pro(hiction  pohcies.  He  was  given  the  task  of  making 
adjustments,  of  writing  letters  in  reply  to  criticisms  of  product 
and  service.  He  was  educated  on  foreign  as  well  as  domestic 
credit  policies  and  taught  so  that  he  understood  the  reasons 
behind  them.  The  export  manager  went  back  into  past  history, 
domestic  and  foreign,  for  "company  problems" — gave  the  facts, 
and  asked  the  salesman  how  he  would  have  approached  the 
solution  of  these  problems.  From  the  replies  and  the  criticism 
of  the  replies  it  was  certain  that  the  salesman  understood  the 
aims  of  the  company  and  had  initiative  and  ability  sufficient  to 
make  it  safe  to  send  him  outside  the  United  States. 

Consumer  Selling. — The  third  stage  of  this  export  salesman's 
training  consisted  first  of  selling  consumers  in  Porto  Rico  on 
behalf  of  Porto  Rican  merchants  who  carried  stocks  of  this 
manufacturer's  products.  This  work — usually  termed  either 
"missionary"  or  "turn-over"  selling — brought  into  play  his 
knowledge  of  Spanish  and  gave  it  a  harder  test  than  would  have 
been  the  case  in  calling  only  on  the  established  trade,  because 
many  consumers  were  entirely  unfamiliar  with  some  of  the 
products  and  even  not  aware  of  their  existence.  This  work 
served  a  double  purpose.  It  stimulated  consumer  demand  for 
both  staples  and  specialties  and  it  gave  the  trade  a  tangible 
proof  of  cooperation  on  the  part  'of  the  manufacturer. 

The  salesman  was  successful  in  this  tj^pe  of  selling  and  was 
sent  from  Porto  Rico  to  Havana,  where  he  worked  as  junior 
salesman  to  the  older  trade  representative  who  visited  Cuba  on 
two  long  trips  each  year.  In  addition  to  work  among  con- 
sumers, the  new  salesman  called  upon  the  small  trade. 

The  most  impressive  part  of  his  Cuban  work  came  in  the 
opening  of  new  and  large  accounts,  his  excellent  reports  on 
investigations  that  revealed  the  rather  unexpected  strength 
of  competition  and  the  manner  in  which  he  handled  several 
minor  problems  without  referring  these  back  to  the  "Home 
Office."  These  supplied  all  but  positive  proof  of  the  wisdom 
of  giving  him  the  highly  important  territory  which  he  has 
since  covered.  But  the  salesman  who  is  to  be  entrusted  with 
great  responsibilities  should  fully  prove  his  right  to  assume 
these  responsibilities.  The  export  future  of  any  manufac- 
turer is  too  valuable  a  potential  asset  to  risk  a  wrong  start 
with  an  unseasoned  man. 


TRAINING  EXPORT  SALESMEN  107 

Work  in  Foreign  Fields. — The  fourth  and  last  stage  followed 
the  salesman's  return  to  the  United  States  and  a  series  of  con- 
ferences with  the  export  manager  that  probed  into  every  corner 
of  the  salesman's  work  in  Porto  Rico  and  Cuba,  and  the  sugges- 
tions which  the  salesman  could  make,  based  on  his  observation 
and  study. 

The  export  manager  selected  the  interior  of  Colombia  as  the 
stage  setting  for  the  final  test.  In  this  selection  he  was  guided 
by  these  considerations: 

1.  It  was  virgin  soil  where  no  direct  representative  of  the  company  had 
ever  visited 

2.  The  accounts  already  opened  by  mail  were  negligible 

3.  The  traveling  would  include  river  steamer  and  mule  back 

4.  The  living  conditions  would  be  no  better  than  in  any  country  which 
salesman  would  later  cover 

5.  The  salesman's  courage  and  persistence  would  be  thoroughly  tested. 

This  trip  was  a  success.  New  accounts  of  the  highest  and 
most  desirable  type  were  added  in  each  country,  and  in  Medel- 
lin — well  off  the  beaten  path — the  agent  selected  was  the  one  the 
export  manager  had  known  to  be  the  ideal  to  be  sought  for  in  case 
the  salesman  failed  in  his  task.  The  clerical  accuracy,  the 
judgment  used  in  extending  discounts,  the  reports  made  to 
assist  the  credit  department  and  the  cooperation  in  re-sale  which 
the  salesman  arranged  were  free  from  more  than  minor  flaws. 

The  test  was  completed.  The  salesman  had  clearly  proved 
his  right  to  handle  important  territory.  His  training  was  com- 
plete. He  has  since  justified  in  his  present  territory  the  expecta- 
tions of  the  company  he  serves. 


CHAPTER  XI 
PREPARING  THE  FIELD  FOR  THE  EXPORT  SALESMAN 

"A  harvest  of  losses  is  the  natural  crop  to  expect  when  the  field 
has  not  been  prepared  for  the  salesman's  arrival." 

— Edmands  Bridgeman  Sanger. 

Fallacy  of  " Inlrodudory  Trip"  Exploded.  The  Export  Salesman 
Should  Not  Be  Permitted  to  Be  an  Explorer  or  Discoverer.  System  in  Preparing 
Field  for  Salesman.  Methods  of  Creating  Dealer  and  Consumer  Acceptance 
Portrayed.  Use  of  Mails  in  Preparing  Field  for  Personal  Visit.  Use  oj 
Advertising  in  Advance  of  Salesman's  Visits.  How  the  Exporting  Manufac- 
turer can  Multiply  Salesman's  Efficiency. 

The  export  salesman  should  be  preceded  by  most  careful 
preparation  of  the  field  he  is  to  cover.  If  this  is  done  the  results 
will  be  measurably  greater  and  the  salesman  will  be  treated 
fairly.  It  is'  equally  a  criminal  waste  of  money  and  of  human 
effort  to  send  an  export  salesman  to  an  unprepared  field. 

A  Common  Misconception. — How  many  have  heard  the 
fallacious  statement,  "An  export  salesman's  first  trip  cannot  be  a 
selling  trip,  but  must  be  a  'get  acquainted '  trip.  On  his  second 
trip,  however,  his  sales  will  be  very  large  because  of  the  business 
friendships  he  has  made  on  his  first  trip."  The  correct  statement 
of  exact  facts  is  this:  ''Only  an  exceptional  export  salesman  can 
secure  a  profitable  volume  of  orders  on  his  first  trip  to  a  field 
which  has  not  been  prepared  for  his  coming.  With  advance 
preparation,  the  average  export  salesman  can  sell  as  large  orders 
as  the  average  salesman  would  on  a  second  trip  over  unprepared 
territory." 

Is  a  "Get  Acquainted"  Trip  Necessary? — There  are  definite 
reasons  why  the  second  statement  is  sound  and  why  the  first  is 
wrong.  It  is  true  that  a  salesman's  first  trip  over  unprepared 
ground  in  normal  times  is  no  more  than  a  "get  acquainted" 
trip — but  it  is  not  true  that  the  export  salesman's  first  trip  must 
be  of  this  character.  The  export  salesman  should  not  be  per- 
mitted the  luxury  of  being  either  an  explorer  or  a  discoverer. 
The  markets  which  he  visits  should  have  been  prepared  for  his 
coming.     They  should  have  been  made  acquainted  with  the  prod- 

108 


PREPARING  THE  FIELD  109 

nets  which  he  has  to  offer.  They  should  know  the  rchabihty 
of  the  maker  of  the  products.  They  should  be  convinced  of 
the  fairness  of  the  policies  of  the  exporting  manufacturer. 

The  Modern  Method. — The  export  salesman  should  not  be 
handicapped  by  carrying  the  burden  of  selling  more  than  mer- 
chandise and  the  ideas  leading  to  the  re-sale  by  the  merchant  of 
this  merchandise.  It  is  a  criminal  waste  of  time,  energy  and 
money  to  proceed  on  the  assumption  that  the  salesman's  first  trip 
must  be  largely  of  a  social  nature.  In  recent  years  the  careful 
students  of  export  selling  have,  time  and  time  again,  proved  the 
falsity  of  the  fallacious  statement  that  for  years  was  allowed 
to  stand  unchallenged. 

What  the  Salesman  Should  Not  Do. — There  should  be  system 
in  the  preparation  of  the  field  for  the  export  salesman.  Behind 
this  system  should  be  some  reasons  for  the  system.  The  base  of 
all  preparations  should  be  the  removal  from  the  salesman  of  all 
tasks  other  than  the  sale  of  merchandise  and  the  sale  of  definite 
ideas  of  re-sale  of  the  merchandise.  To  accomplish  this  task 
changes  at  once  the  salesman's  labors  from  being  herculean  to 
those  possible  to  an  ordinary  mortal.  To  effect  this  change,  it 
is  clear  that  the  exporter  must  himself  sell  the  merchants  to  be 
visited — and  perhaps  even  the  consumers  in  the  cities  on  the 
salesman's  route — the  idea  of  the  maker's  desirability  as  a 
source  of  supply. 

HOW  TO  PREPARE  THE  FIELD  FOR  THE  SALESMAN 

There  are  many  ways  in  which  this  can  be  accomplished. 
Persistent  advertising  of  the  right  type,  both  in  the  local  news- 
papers of  the  cities  to  be  visited  and  in  the  export  journals 
published  in  the  United  States,  supplies  a  means  easily  applied 
and  effective  in  results.  The  average  consumer  would  be  inclined 
to  accept  the  responsibility  of  the  Quaker  Oats  Co.,  or  the  Good- 
rich Tire  &  Rubber  Co.,  or  the  Packard  Motor  Car  Co.,  even 
though  he  had  no  first-hand  acquaintance  with  their  products, 
because  of  their  persistent  and  intelligent  advertising.  Through 
advertising  designed,  not  to  sell  merchandise  but  to  sell  desira- 
bility as  a  source  of  supply  and  to  pave  the  way  for  the  export 
salesman,  the  first  visit  of  the  salesman  can  be  made  of  business 
instead  of  social  character. 

The  Use  of  Correspondence. — The  value  of  correspondence  in 


110  EXPORT  MERCHANDISING 

paving  tho  waj'  for  the  export  salesman  is  unquestioned.  In  a 
series  of  letters  sent  to  a  selected  list  of  prospective  customers 
it  is  not  a  difficult  task  to  accjuaint  these  with  the  history  of  the 
exporting  manufacturer,  his  reputation  for  reliability,  his 
reputation  for  quality  and  his  ability  to  handle  foreign  orders. 
Indeed,  of  the  many  ways  of  preparing  the  field  for  the  later  trip 
of  the  salesman,  the  best  single  way  is  by  correspondence.  But 
the  best  way — as  is  usually  the  case  in  any  type  of  selling — is  to 
combine  skilfully  the  use  of  every  useful  method. 

A  BASIC  PLAN  FOR  ADVANCE  WORK 

One  experienced  manufacturing  exporter  follows  a  plan  which 
certainly  contains  so  many  points  of  strength  and  which  has  so 
many  successes  to  its  credit,  that  it  can  be  studied  with  the 
certainty  that  in  part  or  in  whole  it  can  be  adopted  or  adapted 
with  gains. 

Study  and  Analysis  of  Territory. — First  of  all,  the  general 
territory  to  which  the  salesman  is  to  be  sent  is  carefully  studied. 
The  services  of  export  institutions,  organizations  and  journals  are 
enlisted  in  preparing  the  salesman's  itinerary  and  in  determining 
the  time  which  should  be  spent  in  each  city.  By  this  careful 
examination  of  the  territory  it  is  often  found  advisable  to  lay 
out  side  trips  from  the  leading  cities  and  to  make  trips  into  the 
little-visited  interior  towns.  These  alone,  in  the  case  of  the 
manufacturer  whose  methods  are  described,  have  been  said  to 
yield  sales  and  profits  which  more  than  cover  the  cost  of  prepar- 
ing the  entire  field  for  the  salesman. 

Building  the  Mailing  List. — When  the  cities  and  towns  have 
been  decided  upon,  the  manufacturer  compiles  two  mailing  lists. 
The  first  includes  the  names  of  all  dealers  who  are  in  lines  that 
indicate  even  a  strong  probability  that  they  might  be  engaged 
in  the  re-sale  of  products  of  the  same  general  nature  as  those  of 
the  manufacturer.  The  second  list  contains  only  the  names  of 
the  biggest  and  best  firms  in  the  territory.  In  order  to  be  in 
the  right  position  for  effective  correspondence,  the  manufacturer 
buys  credit  reports  on  all  names  on  this  second  list. 

A  "Field  Preparation"  Campaign. — A  year  before  the  sales- 
man's visit  the  manufacturer  starts  his  "field  preparation 
campaign"  with  a  series  of  bulletin  mailing  cards.  These  are 
handsomely  printed  showing  his  leading  products  in  their  natural 


PREPARING  THE  FIELD  111 

colors.  These  are,  on  their  face,  an  indication  of  size  and  experi- 
ence, since  in  language,  text  and  layout  they  are  clearly  the  work 
of  experts.  The  series  is  usually  of  twelve  bulletins,  mailed  at  two- 
week  intervals.  One  of  these  bulletins  features  the  several  facto- 
ries of  the  manufacturer,  showing  the  immense  number  of 
employees  in  a  striking  way.  Other  cards  show  window  displays 
of  the  maker's  products  in  out-of-the-way  cities  of  the  world, 
as  well  as  on  the  broadest  avenues  of  the  largest  cities  of  the 
world. 

Advance  Letters  That  Pave  the  Way. — Six  months  before  the 
salesman's  trip,  the  plan  calls  for  carefully- worded  letters  in  two 
series.  The  first  series  goes  to  the  large  list  (from  which,  of 
course,  the  names  of  the  elect  have  been  removed)  and  are 
identical  in  wording.  The  second  series  consists  of  individual 
letters  based  on  information  contained  in  the  credit  reports 
previously  mentioned.  While  these  letters  make  it  possible  for 
the  recipients  to  make  purchases — and  a  strong  effort  is  made 
to  secure  at  least  one  customer  in  each  city — the  main  object  of 
the  series  is  to  make  any  representative  of  the  manufacturer  a 
welcome  visitor  later  on. 

Two  Methods  of  Advertising. — Duiing  this  six-month  period 
export  advertising  is  used  in  two  wa3^s.  In  export  journals  the 
salesman's  trip  is  advertised,  showing,  by  means  of  outline  maps, 
the  salesman's  routes  and  the  approximate  dates  that  he  will  be 
in  each  city.  Reprints  of  these  advertisements  are  used  for 
enclosures  in  the  letter  series.  The  second  use  of  export  adver- 
tising is  in  the  local  newspapers  in  the  cities  which  the  traveler 
is  to  visit.  These  advertisements  feature  the  goods  and  their 
maker  rather  than  the  salesman,  but  do  include  a  few  well-worded 
lines  and  a  head  and  shoulders  cut  of  the  salesman. 

An  Effective  Advance  Card. — The  final  letter  in  each  series 
bespeaks  a  welcome  for  the  salesman.  It  is  timed  to  arrive  on  the 
same  mail  as  the  salesman's  advance  card,  which  is  dignified 
but  not  cold,  and  which  shows  a  naturally  posed  photographic 
likeness  of  the  salesman.  This  final  letter  and  the  salesman's 
advance  card  are  timed  to  reach  the  dealer  not  more  than  two 
weeks  before  the  salesman. 

PREPARING  DEALERS  ABROAD  FOR  THE  SALESMAN'S  ARRIVAL 

Each  prospective  customer  should  be  told  long  in  advance  of 
the  salesman's  coming: 


112  EX  POUT  MERCHANDISING 

1.  The  res])onsibility  of  the  exporter 

2.  His  ability  to  export  well 

•i.  His  desirability  as  a  source  of  supply 

4.  His  i)olicy  of  assisting  dealer's  sales 

5.  Tlie  worth  of  the  visit  of  the  salesinaii 

6.  The  quality  of  the  products  offered 

7.  The  profit  to  the  buyer 

8.  The  appeal  to  the  consumer. 

The  Cost  of  Advance  Preparation. — While  it  would  be  useless 
to  figure  the  cost  of  this  preparation  for  any  given  market  for 
purpose  of  illustration  here,  each  exporter  can  easily  make  his 
own  cost  card.  It  will  be  found  that  this  method  of  preparing 
the  field  will  cost  one-fifth  to  one-quarter  as  much  as  a  salesman's 
trip.  It  will  be  found  that  the  salesman  will  be  greeted  on  his 
first  trip  with  the  cordiality  that  the  average  foreign  traveler  is 
greeted  with  on  his  second  trip.  His  orders  will  prove  the  value 
of  the  field  preparation. 


CHAPTER  XII 
PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD 

"Many  firms  handicap  both  salesmen  and  themselves  by  failing  to 
supply  them  with  indispensable  details." — E.  B.  Filsinger. 

Equipment  of  the  Export  Traveler.  Physical  and  Dental  Examination. 
Vaccination  and  Innoculation.  Funds.  Supplies.  Motion  Picture  Pro- 
jector. Use  of  Typewriter.  Call  Sheets.  Preparation  of  Samples.  Routing 
the  Export  Salesman.     Examples  of  Good  and  Bad  Routing. 

John  Chapman,  that  veteran  of  the  export  road,  once  wrote 
out  of  his  long  experience  and  out  of  the  fullness  of  his  heart, 
"The  number  of  export  salesmen  who  succeed  in  spite  of  the 
export  department's  failure  to  equip  them  properly  for  their 
journeys,  makes  me  proud  of  the  ability  of  my  fellow-travelers." 

THE  EDUCATIONAL  BACKGROUND 

It  is  entirely  clear  to  the  experienced  that  the  export  salesman 
should  be  one  who  can  sell,  rather  than  one  who  can  speak  and 
write  in  foreign  languages.  Nevertheless,  good  merchandising 
insists  that  no  artificial  obstacle  be  placed  between  seller  and 
buyer.  Consequently,  each  export  salesmen  should  be  able  to 
express  himself,  not  only  so  that  he  can  be  understood  in  any 
language  which  he  may  be  expected  to  use,  but  also  his  use 
of  each  language  should  be  accurate,  in  order  that  no  distraction 
result  from  faulty  pronunciation  or  choice  of  words.  He  should 
be  able  to  express  his  ideas  quickly,  completely  and  pleasingly. 
The  export  salesman  is  full}^  prepared  for  foreign  fields  only  when 
he  is  the  master  of  the  languages  in  commercial  use  by  the  best 
of  foreign  travelers  in  the  countries  which  he  visits. 

Export  Routine. — ^The  technique  of  exporting  should  be  a 
matter  of  serious  study  by  the  export  salesman.  He  can  rightly 
be  expected  by  his  actual  and  prospective  customers  to  be 
thoroughly  familiar  with  the  details  as  well  as  the  principles  of 
international  commercial  exchange.  In  fact,  it  is  far  more  often 
necessary  in  a  well-roundetl  organization  for  foreign  selling  for 
the  export  traveler  to  know  more  of  current  details  than  the 
8  113 


114  EXPORT  MERCHANDISING 

export  manager.  For  the  export  manager  usually  has  technical 
assistance;  and  technical  assistants.  The  export  traveler  must 
meet  single-handed  probhnns  which  at  export  headquarters 
would  fall  to  the  export  technician  rather  than  to  the  manager  of 
an  export  department. 

Manufacturing  exporters  can  well  take  a  leaf  from  govern- 
mental practice  in  connection  with  the  knowledge  expected  of 
the  foreign  traveler.  United  States  commercial  attaches  and 
trade  commissioners  must  know  fully  and  accurately  the  coun- 
tries which  they  are  to  visit.  Since  the  commercial  world 
abroad  has  long  since  been  discovered  and  explored,  and  since 
recorded  knowledge  in  regard  to  every  market,  large  and  small, 
todaj^  exists  in  easily  accessible  form,  there  is  no  longer  any 
excuse  for  the  foreign  salesman  to  be  sent  out  on  his  initial 
journeyings  until  he  has  absorbed  this  wealth  of  expert  knowl- 
edge which  is  available  at  a  nominal  expense. 

HOW  TO  TRAVEL       ■ 

There  is  a  vast  difference  between  the  novice  and  the  veteran 
of  the  export  road.  The  veteran  knows  from  experience  what 
hotels  to  select;  how  to  clear  his  samples  comfortably;  when  to 
insist,  when  to  request,  when  to  ask;  when  and  how  much  to  tip, 
and  how  to  insure  his  personal  comfort  at  the  correct  minimum 
of  expense. 

It  is  not  to  be  expected  that  the  novice  salesman  can  have 
these  advantages  except  as  the  experience  of  the  export  executive 
and  the  knowledge  of  the  export  executive  makes  this  possible. 
Fortunately  for  exporters,  both  our  government  and  export 
organizations  have  prepared  a  highly  creditable  fund  of  informa- 
tion, even  on  these  details  of  overseas  selling.  The  wonderful 
spirit  of  willingness  to  exchange  information  which  exists  among 
exporting  manufacturers,  places  an  obligation  upon  the  export 
executive  towards  his  salesmen,  and  leads  to  placing  the  novice 
salesman  of  today  on  a  far  different  footing  from  the  novice 
salesman  of  a  decade  ago. 

Etiquette  of  the  Road. — The  etiquette  of  the  road  should  be 
impressed  upon  each  new  foreign  traveler.  This  does  not 
merely  mean  a  word  of  caution  against  showy  and  extravagant 
entertainment  of  customers  and  others.  It  means  the  observ- 
ance of  the  established  if  unwritten  rules  which  have  been  wisely 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     115 

built  up  over  generations  of  travel.  It  is  not  for  the  export 
salesman  to  inquire  the  name  and  business  connection  of  a  chance 
acquaintance,  even  one  who  has  expressed  some  extreme  opinion 
or  who  has  advanced  some  most  interesting  information.  The 
etiquette  of  the  road  protects  the  incognito  of  each  traveler.  It 
permits  anyone  in  a  group  to  express  his  opinion  and  to  give  the 
reasons  behind  his  opinion,  and  to  be  queried  as  to  both.  But 
it  insists  that  no  one  shall  ask  another's  name  or  connection.  It 
insists  that  each  man  who  desires  to  make  his  identity  known 
shall  have  the  privilege  of  announcing  himself,  at  such  time  and  in 
such  manner  as  best  suits  him. 

There  are  two  contributing  causes  to  the  failure  to  equip  export 
salesmen  properly.  The  first  is  that  the  subject  has  not  been 
openly  discussed,  and  even  in  print  other  than  in  Filsinger's  fine 
monograph  it  has  been  all  but  overlooked.  The  second,  and 
perhaps  the  more  powerful  cause,  is  that  properly  to  equip  the 
export  salesman  involves  a  great  deal  of  work,  largely  of  routine 
nature  and  at  a  time  when  the  export  executive  has  a  right  to  be 
mentally  and  bodily  tired  from  his  efforts  to  keep  his  regular 
export  schedule  moving  slowly  while  training  a  new  salesman  for 
the  foreign  field. 

There  are  certain  developments  as  a  result  of  experiments 
conducted  many  years  ago,  that  have  proved  their  value.  Two 
of  these  have  such  manifest  advantages  that  they  are  given  here 
as  freely  as  they  have  been  guarded  carefully  until  their  worth 
was  proved  by  practice  in  many  markets  to  be  all  that  the 
surface  indications  would  prophesy. 

PROSPECTIVE  CUSTOMER  SHEETS 

The  first  of  these  two  mechanical  steps  in  preparing  the  sales- 
man for  the  field  is  termed  "Prospective  Customers  Sheets." 
Their  use  can  be  recommended  safely  because  the  one  favorable 
experience  has  been  duplicated  and  triplicated  by  the  experience 
of  the  few  close  friends  who  have  been  given  the  plan  in  its 
entirety  and  who  have  adopted  it  throughout  territory  in  which 
their  "direct  from  head-quarters"  salesmen  operate. 

The  fundamental  purpose  behind  the  prospective  customers 
sheet  is  to  render  a  sales  service  to  the  salesman.  It  will  be  seen 
to  be  a  convenience  and  a  time-saver,  but  these  economies  of  the 
salesman's  time  and  effort  are  a  minor  factor  compared  to  the 


116  EXPORT  MERCHANDISING 

nicaihs  they  sui)i)ly  the  export  oxecutivc  (o  convey  his  best  sales 
suggestions  at  a  vital  moment.  If  this  phase  of  its  use  is  neg- 
lected, it  becomes  merely  another  burden-maker.  Viewed  in  this 
aspect,  the  value  of  the  prospective  customers  sheet  depends 
upon  the  ability,  and  ability  to  use  ability,  of  the  export 
executive. 

The  prospective  customers  sheet  is  a  form  printed  on  bond 
paper  to  permit  pen  and  ink  writing.  At  the  top  it  bears  the 
salesman's  name  and  the  company  name  for  easy  identification. 
The  heading  includes  spaces  for  the  name  of  the  customer  or 
prospective  customer,  street  address,  post  office  box,  city,  country 
and  date  of  salesman's  report. 

Tabulating  Information. — On  these  five-by-eight  sheets  there 
is  typed  (with  three  carbon  copies)  in  addition  to  customer's 
name  and  address,  a  summary  of  all  information  possessed  by  the 
exporter.  If  the  sheet  describes  an  actual  customer  it  shows  his 
purchases  in  every  year,  analyzed  by  products.  It  shows  dis- 
counts, special  prices  and  exact  terms  of  sale.  In  another  column 
it  gives  the  vital  facts  about  the  customer  as  gathered  from  credit 
reports,  references,  letterheads  and  brother  exporters.  If  there 
has  been  a  limit  set  by  the  credit  manager,  this  is  recorded.  If 
there  is  any  special  matter  to  be  adjusted — such  as  damaged 
stock  or  goods  shipped  or  ordered  in  error — the  prospective 
customers  sheet  serves  as  an  admirable  place  for  a  reminder. 
Overdue  accounts  are  frequently  noted  for  collection. 

Selling  Instructions. — But  the  important  part  follows  the  not- 
ing of  these  facts  on  the  sheet.  After  all  of  this  information  has 
been  entered  by  clerks  on  the  sheets,  the  export  executive  goes 
into  a  solitary  conference  surrounded  by  all  data  available  on  the 
territory  to  be  covered  by  the  salesman  on  the  customers  and 
prospective  customers  in  the  territory.  On  the  third  carbon 
copy  he  pens  his  selling  instructions  based  on  his  diagnosis  of  the 
tasks  which  he  feels  most  important  for  the  salesman  to 
accomplish. 

Because  of  certain  possibilities  in  production,  the  export 
manager  may  indicate  on  many  sheets  (where  the  line  of  busi- 
ness of  the  customer  or  prospect  indicates  an  opening)  the 
featuring  of  a  product  other  than  the  one  the  salesman  would 
select  as  a  leader.  Because  of  the  profit  involved  on  another 
specialty  other  customers  might  be  offered  special  quantity 
prices  because  their  credit  reports  had  shown  capacity  to  absorb 


PREPARING  THE  EXPORT  ^SALESMAN  FOR  THE  FIELD     117 

an  unusual  amount.  Those  arc  but  indications  of  the  many 
forms  of  sales  direction  made  possible  by  the  use  of  the  prospec- 
tive customers  sheet. 

Territorial  Comments. — After  the  sales  executive  has  com- 
pleted his  comments  and  instructions  on  individual  customers 
and  prospective  customers  he  turns  to  an  even  more  important 
task.  For  there  are  call  sheets  for  each  city  and  for  the  entire 
country.  These  show  not  only  customs  tariffs  and  commercial 
travelers'  hcense  fees,  for  example,  but  are  used  by  the  export 
executive  to  lay  out  the  sales  plan  of  each  division,  indicating  the 
desirability  or  undesirability  of  agency  treatment,  sampling  or 
local  advertising  campaigns,  or  need  of  a  local  assistant  in  visiting 
consumers  in  behalf  of  dealers. 

When  these  comments  have  been  made  in  pen-and-ink,  the 
remaining  three  copies  (original  and  two  carbons)  are  returned 
to  the  stenographers,  who  add  to  these  three  copies  the  sales 
executive's  sales  directions.  One  carbon  copy  is  retained 
by  the  export  manager,  one  copy  is  carried  by  the  salesman, 
while,  for  greater  safety,  the  remaining  copy  is  mailed,  city 
by  city,  to  be  held  for  the  salesman's  arrival. 

THE  SALESMAN'S  SAMPLES 

The  great  majority  of  exporters,  both  novices  and  veterans, 
are  correct  in  the  samples  which  they  supply  for  their  salesmen. 
Pride  in  product,  domestic  practice  and  the  obvious  preference 
of  any  buyer  for  a  sample  as  against  a  description  or  illustration, 
explains  the  practically  perfect  percentage  of  correctness  in  this 
highly  important  matter.  The  usual  fault — as  seen  by  the 
salesman  and  by  the  watchdog  of  the  treasury — is  to  give  the 
salesman  too  many  samples  on  his  first  trip.  This  results  in 
excess  baggage,  extra  luggage  with  attendant  first  expense  and 
need  of  attention  by  the  salesman,  and,  now  and  then,  delays 
and  extra  expense  in  passing  through  customs. 

But  unless  carried  to  a  ludicrous  extreme  the  fault  is  only  in 
the  eyes  of  the  salesman  and  those  who  watch  his  expense  account 
without  knowledge  of  the  relative  value  of  expenditures.  Many 
salesmen  who  have  cut  down  their  samples  have  later  returned 
to  the  original  or  an  enlarged  assortment.  There  is  a  sales 
value  in  samples,  even  in  linos  that  arc  not  sold  freely,  because  the 
wide  variotv  frees  the  dealer  from   a  feeling  that  he  has  no 


118  EXPORT  MERCHANDISING 

choice.  It  also,  an  has  ])cen  proved  in  many  cases,  magnifies 
the  maker's  importance  in  the  dealer's  eyes. 

American  Practice  Excels. — There  is  usually  only  commenda- 
tion in  the  way  American  manufacturers  pack  these  samples. 
It  is  obvious  that,  just  as  a  good  jewel  deserves  and  repays  a  good 
setting,  so  articles  of  quality  should  not  be  displayed  in  any  but 
suitable  surroundings.  The  expense  of  the  best  sample  cases, 
trays,  racks  and  trunks  is  one  that  will  bring  dividends. 

Whenever  size  or  nature  of  product  prevents  the  use  of  actual 
samples  or  models  or  miniatures  of  the  original,  hand-colored 
photographs  on  sheets  ten-by-fourteen  to  eighteen-by-twenty, 
in  a  specially-made  brief-case  type  of  holder,  will  be  found  a 
decided  aid  to  the  salesmen.  This  method  of  presenting  a  repro- 
duction of  articles  offered  is  especially  coveted  by  agents  whose 
salesmen  have  many  lines  to  present  and  to  whom  actual  samples 
are  often  a  real  burden.  They  are  highly  applauded  by  "combi- 
nation export  travelers. ' '  They  have  a  real  place  in  the  equipment 
of  the  salesman  abroad. 

There  can  well  be  wise  difference  in  practice  in  connection 
with  insurance  of  salesman's  samples  and  investment  in  personal 
effects.  The  length  and  nature  of  the  journey;  the  value  of 
samples  and  equipment;  the  rate  of  insurance  charged,  and  the 
products  involved,  all  have  a  bearing.  The  jewelry  salesman 
must  insure  his  samples,  let  us  say,  where  the  salesman  with 
samples  which  have  no  commercial  value  and  without  valuable 
personal  efTects  may  wisely  decide  that  insurance  is  not  needed. 

Samples  of  Advertising  Material. — The  value  of  the  printed 
word — advertising — in  export  selling  should  not  be  permitted 
to  be  taken  for  granted.  It  is  the  duty  of  the  export  salesman 
so  to  portray  the  use  and  value  of  advertising,  including  dealer 
helps,  that  the  customer,  actual  or  prospective,  will  realize  its 
profitmaking  possibilities. 

Therefore,  the  export  salesman  should  carry,  if  necessary,  a 
separate  portfolio,  or  even  some  larger  container,  with  actual 
specimens  of  all  advertising  and  display  material  which  the 
export  executive  feels  are  of  value  to  customers  overseas.  While 
it  may  not  be  possible,  for  example,  for  the  salesman  to  carry 
with  him,  or  even  have  sent  in  advance  of  his  arrival,  some  of  the 
largest  window  displays,  it  is  at  least  possible  for  a  black  and 
white  or  colored  reproduction  of  the  largest  window  displays  to 
be  a  part  of  his  equipment. 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     119 

The  use  of  photographic  reprockictions  of  cabinets,  (hsplay 
shelves,  counter  and  aisle  display  attention-arresters  bridges 
many  a  gap  in  the  visualization  of  the  assistance  these  sales 
helps  can  render.  A  salesman's  equipment  is  not  complete 
unless  it  includes  physical  means  of  presenting  the  advertising, 
both  publicity  and  material,  in  convincing  form. 

Portable  Motion  Picture  Projector. — Because  the  modern  use 
of  the  motion  picture  in  export  selling  is  thoroughly  described  in 
another  chapter,  and  its  many  and  valuable  uses  in  the  hands  of 
the  export  salesman  are  there  portrayed,  it  is  only  necessary  here 
to  emphasize  that  each  export  executive  should  carefully  consider 
its  possibilities  in  direct  connection  with  the  preparation  of  each 
salesman  for  a  foreign  field. 


PHYSICAL  EXAMINATIONS  AND  HEALTH  PRECAUTIONS 

The  salesman's  physical  condition  is  of  immense  importance. 
Therefore,  even  before  his  training  for  foreign  fields  has  com- 
menced, a  rigid  physical  examination  should  be  passed.  Many 
manufacturers  today  have  their  own  physicians  or  receive  fre- 
quent visits  from  the  "company  doctor."  In  such  cases  there 
is  at  hand  every  facility  for  both  physical  examination  and  helpful 
health  suggestions.  But  the  absence  of  such  a  fortunate  condi- 
tion is  no  excuse  for  the  failure  to  provide  for  the  adequate 
covering  of  this  important  detail.  An  excellent  practice,  and 
one  to  which  a  growing  number  of  exporting  manufacturers  have 
been  won,  divides  the  medical  angle  into  two  parts.  First,  a 
most  rigid  physical  examination  is  made  by  a  physician  qualified 
as  a  life  insurance  examiner  and  under  the  most  exacting  condi- 
tions demanded  by  any  life  insurance  company.  Then  the  same 
or  another  physician,  who  has  been  notified  in  advance  of  the 
exact  requirements,  coaches  the  man  on  the  precautions  which 
he  should  take  in  traveling  abroad,  and  prepares  for  him  a  kit 
built  to  include  such  staple  medicines  as  the  countries  the  sales- 
man will  visit  naturally  suggest.  These  would  include  arnica, 
quinine,  a  laxative,  aspirin  and,  very  possibly,  some  convenient 
vitamine  tablet  or  capsule. 

It  is  now  possible  to  produce  a  standard  "first  aid  to  the 
injured"  set  for  travelers'  use,  and  more  and  more  these  are  being 
found  in  the  equipment  of  the  salesman. 

Dental   Work. — In    addition   to   a   physical    examination,    a 


120  EXPOUT  MERCHANDISINa 

dental  examination  is  also  highly  advisable.  More  and  more  the 
relation  of  good  teeth  to  good  health  is  being  appreciated.  There 
is  no  question  that  any  dental  work  should  be  anticipated, 
rather  than  left  to  the  good-fortune  or  ill-fortune  which  attends 
the  finding  of  a  good  dentist  in  the  field. 

Vaccination  and  Inoculation. — It  is  obvious  that,  regardless 
of  the  territory  in  which  a  man  is  sent,  vaccination  or  re-vaccina- 
tion against  smallpox  is  an  absolute  essential.  This  applies  with 
equal  force  to  inoculations  which  prevent  typhoid.  A  modern 
physician  can  be  depended  upon  to  advise  wisely  in  regard  to 
any  immunization  treatment  against  malaria  or  other  diseases 
than  smallpox  or  typhoid. 

The  export  executive  should  not  take  it  for  granted  that  the 
examining  or  consulting  physician  will  fully  inform  the  salesman. 
Therefore,  it  is  the  duty  of  the  export  executive  rather  than  the 
physician  to  be  positive  that  the  export  salesman  is  sent  into 
the  field  with  an  adequate  knowledge  of  what  to  drink  and  what 
not  to  drink;  what  to  eat  and  what  not  to  eat;  how  much  to  eat, 
and  what  precautions  he  should  take  whenever  he  is  exposed  to 
any  specific  diseases.  There  is  no  excuse  today  for  the  failure 
of  a  traveler's  equipment  to  include  mosquito  nets  where  they 
are  certain  to  be  needed,  nor  for  his  ignorance  of  the  proper 
treatment  when  attacked  by  the  hookworm. 

THE  SALESMAN'S  WARDROBE 

It  is  the  duty  of  the  export  executive  to  acquaint  himself  fully 
with  the  requirements  of  the  traveling  salesman's  wardrobe. 
It  is  self-evident  that  this  will  vary  somewhat  in  connection  with 
the  territory  covered  by  the  salesman.  The  nature  of  the  product 
and  the  method  of  its  sale  may  well  have  an  important  bearing 
upon  the  completeness  of  the  wardrobe.  In  certain  lines  and 
circumstances  it  will  be  not  only  advisable,  but  socially  necessary, 
for  the  traveler  to  carry  with  him  evening  dress,  a  dinner  coat 
and,  very  possibly,  other  formal  clothes.  The  worth  of  govern- 
mental, public,  semi-pu])]ic  and  cooperative  soui-ces  of  information 
is  well  proved  in  these  as  in  other  minor  problems  of  exporting. 

While  differences  of  opinion  will  be  found  as  to  the  ward- 
robe requirements  of  the  export  traveler  in  his  journeyings,  these 
will  be  no  harder  to  reconcile  than  the  conflicting  opinions  in 
connection  with  the  wardrolw  equipment  of  the  domestic  sales- 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     121 

man.     Fuudaincntally   the  export  salesman's  wardrol)e  should 
insure  his  comfort — physical  and  mental. 

PORT  FORMALITIES 

While  it  is  certain  that  regulations  governing  the  departure 
and  entry  of  export  salesmen  will  be  modified,  it  is  well  to  indicate 
the  fact  that  restrictive  regulations  are  now  and  probably  will 
continue  in  existence  in  some  form.  It  is,  therefore,  essential 
that  before  the  departure  of  a  salesman  overseas  the  Bureau  of 
Foreign  and  Domestic  Commerce  or  some  export  organization 
be  consulted,  to  make  sure  that  no  income  tax,  passport  or  other 
regulation  be  neglected.  It  is  important,  also,  that  the  salesman 
be  definitely  instructed  in  regard  to  the  clearance  of  his  samples 
on  his  return  from  a  trip  abroad.  In  some  cases,  at  present,  the 
wise  practice  is  to  give  the  salesman's  samples  to  some  customer 
or  agent  in  the  last  foreign  city  on  the  salesman's  route. 

Bonding  the  Export  Salesman. — The  character  of  the  export 
salesman  has  not  been  stressed  in  earlier  chapters.  It  is  only 
common  sense  to  prepare  for  the  export  road  only  salesmen  in 
whom  rugged  honesty  and  positive  personal  and  business  morality 
abide  as  dominant  forces.  Just  as  character  is  the  sine  qua  non 
of  credit  it  is  absolutely  the  qualification  the  existence  of  which 
every  employer  of  export  salesmen  must  determine — and  beyond 
the  slightest  doubt.  At  first  thought  it  seems  paradoxical  to 
insist,  also,  that  the  export  salesman  should  be  bonded.  But 
bonding  insures  the  future  rather  than  insults  the  present.  This 
has  been  proven  true  repeatedly.  The  bank  messenger  who 
risked  his  life  for  his  employer's  interests  has  later  succumbed 
when  his  moral  fibre  deteriorated.  The  most  loyal  of  employees 
may  lose  mental  balance  and  change  to  a  major  or  minor  klepto- 
maniac. It  is  sound  business  judgment  to  bond  every  export 
salesman  for  the  full  total  of  his  pecuniary  trusts. 

The  Route  Sheet. — It  is  always  advisable  for  a  route  sheet  to 
be  prepared  covering  the  salesman's  entire  trip.  Against  each 
city  should  be  placed  his  mail  and  his  cable  addresses,  and  the 
dates  at  which  it  is  expected  he  will  be  in  each  city. 

It  would  be  absurd  to  imagine  that  the  salesman  will  be  on 
time  in  reaching  each  city,  and  that  he  will  stay  exactly  the 
number  of  days  indicated  on  such  a  route  sheet.  The  advantage 
lies  not  in  the  accuracy  of  the  calculations  but  in  having  a 


122  EXPORT  MERCHANDISING 

definite  base  from  which  the  salesman  can  work.  Sucli  a  definite 
set  of  dates  enables  him  to"  cable  intelligently  in  regard  to  his 
progress.  It  is  indispensable  in  connection  with  any  private 
route  codes.  Merely  because  an  entry  on  the  route  sheet  shows 
that  a  salesman  is  scheduled  to  be  in  Rio  de  Janeiro  on  August 
6,  by  no  means  indicates  the  day,  or  even  the  month,  in  which 
he  will  actually  be  in  Rio.  But  it  does  enable  the  salesman  to 
cable  that  he  is  three  weeks  late,  with  a  certainty  that  this  message 
cannot  be  misinterpreted,  even  though  it  is  sent  several  weeks 
after  his  arrival  in  Rio.  Modern  exporting  demands  that  the 
salesman's  cable  address  be  registered  in  each  important  city 
he  visits.  In  some  countries  this  can  be  done  in  advance  of  his 
departure;  in  others  it  is  necessary  for  him  to  attend  personally 
to  the  registration  on  arrival. 

Mail  Addresses. — The  salesman's  mail  addresses  can  be  in 
care  of  the  American  Consul,  in  care  of  an  agent  or  prominent 
customer,  or  in  care  of  a  bank, — to  list  the  leading  methods 
employed.  When  the  hotel  is  definitely  known  in  advance  it  is 
advisable  to  use  it  for  the  address,  unless  there  is  some  better 
method  possible.  It  is  always  inadvisable  to  have  mail  sent 
to  "General  Delivery"  or  its  equivalent,  because  this  may  well 
mean  long,  tedious,  wasteful  waiting  in  line  and  difficulties  in 
connection  with  identification. 

CORRESPONDENCE 

The  salesman  in  the  field  is  entitled  to  the  fullest  possible 
knowledge  of  all  contacts  between  the  territory  he  covers  and 
the  parent  enterprise.  Not  only  should  he  receive  copies  and 
follow  copies  of  all  closed  transactions  as  evidenced  by  invoices, 
but,  similarh",  he  should  receive  copies  and  follow  copies  of  all 
correspondence  sent  by  the  parent  enterprise  into  his  territory, 
together  with  copies  of  all  important  letters  originating  in  his 
territory,  the  contents  of  which  are  not  clearly  indicated  by 
replies  of  which  he  receives  copies. 

In  addition  to  the  care  which  should  be  taken  in  connection 
with  mailing  addresses,  on  which  stress  is  laid  elsewhere,  it  is 
important  that  the  envelopes  used,  both  b}^  the  parent  enterprise 
and  the  salesman,  should  be  strong  enough  to  withstand  the 
rigors  of  the  long  distances  they  travel,  and  sufficiently  water- 
proof to  resist  the  penetrating  moisture  inevitable  in  many 
instances. 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     123 

It  will  aid  the  salesman  to  identify  mail  orij!;inating  with  his 
house  if  some  unusual  color  or  color-eom])i nation  is  used  in  the 
manufacture  of  the  envelope,  so  that  it  will  catch  his  eye  even  if 
wrongly  filed  in  the  hotel  office,  or  mislaid  but  still  in  sight,  there 
or  elsewhere. 

COPIES  OF  INVOICES 

American  overseas  travelers  are  more  commonly  sent  abroad 
by  manufacturers  who  have  a  wide  line  of  products  to  offer, 
than  those  who  have  a  single  article.  When  an  enterprise 
manufactures  a  line  which  runs  into  scores,  hundreds,  or  even 
thousands  of  items  it  is  imperative  that  the  foreign  salesman 
carry  with  him  in  some  form  a  record  of  the  items  purchased  by 
each  existing  customer.  This  record  may  be  in  the  form  of  a 
bound  volume  of  copies  of  invoices  for  one,  two,  three  or  more  j^ears, 
arranged  alphabetically  or  by  correspondence  numbers  of  the 
customer.  Where  copying  is  necessarily  done  this  is  not  a 
wasteful  method,  since  the  sheets  can  be  of  thinnest  onion-skin 
tissue.  Loose-leaf  filing  of  carbon  copies  of  invoices  is  a  second 
method.  There  is  a  growing  use  in  foreign  as  in  domestic  fields 
of  an  analysis  card  showing  the  actual  purchases  by  items  of 
each  customer. 

Indirect  Purchases  Shown. — In  just  the  same  manner  the 
indirect  overseas  purchases  can  be  shown.  More  and  more, 
export  commission  houses  are  cooperating  with  export  manu- 
facturers, just  as,  more  and  more,  export  manufacturers  are 
wisely  cooperating  with  export  commission  houses.  As  a  result 
of  this  mutually  increased  contact  there  has  been  a  growth  of 
mutual  confidence.  This,  in  turn,  has  led  to  the  identification 
of  shipping  marks  in  order  that  the  manufacturer  might  not 
unwittingly  solicit  direct  orders  or  in  any  way  alienate  importers 
abroad  from  purchasing  his  products  through  export  com- 
mission houses. 

Those  exporting  manufacturers  who  have  close  relations 
with  export  commission  houses  are  thus  enabled  to  equip  their 
salesmen  with  copies  of  invoices  made  through  commission 
houses  and  bearing  the  full  name  and  address  of  the  consignees — a 
decided  sales  assistance  of  mutual  value  to  both  the  manu- 
facturing exporter  and  the  export  house. 

The  Portable  Typewriter. — Guesswork  should  be  eliminated 


124  EXPORT  MERCHANDISING 

ill  connection  with  export  orders  and  export  correspondence. 
Tliis  points  to  the  equipment  of  the  foreign  salesman  with  one 
of  the  several  excellent  portable  typewriters.  The  use  of  the 
typewriter  in  place  of  long-hand  is  not  an  extravagance.  It 
records  clean-cut  and  unmistakable  quantities  and  catalog 
numbers  on  orders.  It  results  in  easily  read  originals  and 
"follow  copies"  of  correspondence.  It  places  in  the  hands  of 
each  customer  sold  a  thoroughly  legible  copy  of  the  order  which 
he  has  placed.  Incidentally,  in  this  connection,  the  foreign 
traveler  in  the  field  should  secure  signed  copies  of  all  orders. 
He  should  receive  as  well  as  send  follow  copies  of  all  orders  and 
invoices,  and  all  correspondence. 

Mechanical  Aids  to  Accuracy. — It  has  already  been  empha- 
sized that  the  good  salesman  must  also  be  a  good  clerk.  It  is  the 
duty  of  the  export  executive  to  aid  positively  in  this  direction  by 
equipping  his  overseas  travelers  with  order  forms,  credit  report 
blanks,  correspondence  blocks  and  statistical  record  forms  which 
will  minimize  clerical  labor  while,  at  the  same  time,  directing 
a  salesman  positively  toward  the  supplying  of  the  exact 
information  required  of  him. 

THE  SALESMAN'S  FUNDS 

American  manufacturers  sending  salesman  overseas  have 
rightly  been  criticized  for  having  made  no  adequate  arrange- 
ments for  the  salesman's  finids.  Many  cases  have  been  reported 
to  export  organizations  which  have  shown  clearly  a  lack  of 
understanding  as  to  the  fundamental  importance  of  properly 
financing  the  export  salesman.  Letters  of  credit  and  travelers' 
checks  are  approved,  because  they  have  stood  the  test  of 
time.  One  Eastern  manufacturer  makes  it  a  point  to  supply  his 
salesman  with  a  letter  of  credit  sufficient  for  the  minimum 
requirements  of  the  entire  trip.  A  second  letter  of  credit,  of 
similar  size  is  sent  to  an  intermediate  point  on  the  salesman's 
journey.  Arrangements  are  made  so  that  it  will  be  safely  held 
for  the  salesman's  arrival. 

Legitimate  Expenses  Defined. — The  unusual  is  to  be  antici- 
pated in  connection  with  the  expenses  of  the  export  salesman. 
Not  only  should  his  funds  be  ample  to  care  for  the  unexpected, 
but,  also,  there  should  be  a  clear  understanding  between  the 
export  executive  and  the  salesman  in  regard  to  expenses,  before 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     121) 

rather  than  after  a  trip  is  started.  There  should  be  defined,  in 
writing,  exactly  the  expenses  which  the  employer  considers 
legitimate.  If  pressing  and  laundiy  items  are  to  be  included 
as  business  expenses,  this  point  should  be  a  matter  of  record. 
Beyond  the  bounds  of  specific  anticipation  the  salesman  should 
be  carefully  instructed,  so  that,  with  a  knowledge  of  the  general 
principles,  his  own  common  sense  will  prevent  any  unneeded 
conflict  of  opinion. 

Cable  Collect  Cards. — In  connection  with  the  financing  of  the 
export  salesman  it  is  advisable  to  anticipate,  so  far  as  possible, 
his  activities  which  by  advance  arrangements  might  well  be  paid 
from  the  home  office  rather  than  ])y  the  salesman  in  the  field. 
There  are  limited  possibilities  offered  by  the  use  of  "cable 
collect  cards"  or  their  equivalent.  The  several  privately  owned 
cable  companies  are  willing  to  issue  these  for  use  in  cities  overseas 
in  which  they  maintain  branch  offices,  but  not  for  use  elsewhere. 

Many  cable  companies  are  government  owned  and  have  regu- 
lations requiring  prepayment  of  cables.  In  consequence,  much 
of  Europe,  for  example,  is  thus  barred  from  the  field  of  collect 
cable  messages.  The  total  of  all  limitations  and  the  number  of 
"collect  cards"  or  "letters  of  authority  for  collect  messages" 
places  such  a  burden  on  the  wide-traveling  export  salesman  that 
their  use  is  not  general.  This  collect  service  is  well  adapted  for 
use  by  resident  agents  abi'oad  in  the  cases  where  cable  tolls  are 
chargeable  to  the  American  manufacturer.  In  the  fortunate 
zones  a  salesman's  withdrawals  against  funds  can  often  be 
decidedly  reduced,  particularly  in  lines  in  which  prices  change 
daily. 

Powers  of  Attorney. — In  several  countries,  notably  Brazil, 
the  traveler  may  need  a  Power  of  Attorney.  No  guess  work 
should  be  permitted  in  this  connection.  The  Bureau  of  For- 
eign and  Domestic  Commerce  will  supply  detailed  informa- 
tion which  will  lead  to  the  preparation  of  an  adequate  Power  of 
Attorney.  Each  enterprise  must  decide  for  itself  exactly  what 
authority  it  wishes  to  confer  by  its  Powers  of  Attorney  to  its 
export  salesmen.  Manifestly  these,  to  be  of  service,  must, 
however,  include  such  powers  as  are  necessitated  by  the  existing 
legislation  in  each  political  division  to  be  visited.  There  is  no 
reason  why  any  manufacturer  should  go  further  in  a  Power  of 
Attorney  than  common  sense  dictates.  Obviously,  a  veteran 
traveler  who  enjoys  the  entire  confidence  of  his  employers  can 


126  EXPORT  MERCHANDISING 

safely  be  entrusted  with  an  (Mitirely  different  dociunent  than 
that  suppHed  to  a  new  employee. 

Letters  of  Introduction. — There  is  a  gi'owing  understanding  of 
the  value  of  well-selected  letters  of  introduction  for  the  use  of  the 
export  salesman.  These  prepare  the  field  for  the  salesman  in  one 
sense,  and  with  certain  salesmen  they  certainly  have  distinct 
value  in  preparing  him  for  the  field.  Many  men  are  so  con- 
stituted that  they  have  unlimited  confidence  the  moment  they 
know  that  they  have  some  definite  person  in  each  city  with  whom 
to  confei'.  With  such  men  the  use  of  letters  of  introduction  is 
decidedly  valual)le.  Such  letters  can  originate  with  export 
organizations  and  associations,  trade  bodies,  foreign  freight  for- 
warders, transportation  companies,  banks,  mercantile  and  credit 
agencies,  and  business  and  personal  friends  of  the  management 
and  executive  staff  of  the  exporting  enterprise.  It  is  always  well 
to  anticipate  the  salesman's  visits  by  letters  written  and  mailed 
to  customers  and  agents,  as  well  as  letters  of  introduction  to  be 
carried  and  presented  by  the  salesman  in  person. 

Letters  of  Authority. — A  continental  custom  which  occasion- 
ally proves  its  worth  is  the  equipping  of  the  overseas  traveler 
with  a  definite  letter  of  authority.  This  differs  from  a  Power  of 
Attorney  in  that  it  defines  the  exact  relations  of  the  salesman  to 
the  parent  enterprise  in  many  details  which  would  not  of  neces- 
sity be  properly  the  subject  of  a  Power  of  Attorney.  Such  a 
letter  might  well  define  the  right  of  the  salesman  to  serve  notice 
of  the  cancellation  of  agency  relations,  or  to  enter  into  agency 
relations.  Occasionally  such  letters  include  the  right  to  contract 
for  local  advertising  and  the  incurring  of  similar  expenses. 


THE  SALESMAN'S  INSTRUCTIONS  BOOK 

It  is  well  to  bind  the  loose  typewritten  sheets  or  letters  of 
instruction  in  a  permanent  cover,  reserving  a  duplicate  carbon 
copy  for  the  export  manager's  desk.  While  loose-leaf  binders 
offer  conveniences,  for  this  one  purpose  it  has  been  found  that 
the  compactness,  security  and  permanence  of  the  bookbinder's 
method  are  best  in  service. 

This  book  at  its  best  contains  all  vital  information  not  included 
in  prospective  customers  sheets.  Cable  codes,  tables  of  freight 
rates,  copies  of  invoices,  competitors'  prices,  exposition  of  poli- 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     127 

cies,  the  salesman's  route  by  dates,  agency  arrangements,  if 
any,  in  force,  specimen  agency  contracts,  special  prices  to  be 
offered  in  certain  contingencies — these  few  items  show  the 
possibilities  of  this  book. 

Standard  Agency  Agreement. — The  exclusive  export  agent 
and  the  exclusive  export  agency  contract  are  discussed  in  detail 
in  other  chapters.  A  growing  practice,  and  one  which  has  much 
to  commend  it,  is  to  include  in  an  envelope  affixed  to  the  cover  of 
the  salesman's  instruction  book  copies  of  the  standard  agency 
agreement  written  in  the  languages  of  the  countries  which  the 
salesman  will  visit.  The  advantages  of  having  these  contracts 
separate  from  the  book  are  obvious,  when  it  is  considered  that 
the  prospective  agent  will  naturally  wish  to  study  at  length  the 
provisions  of  the  agreement,  and  that,  naturally,  the  salesman's 
private  instructions  book  should  never  be  permitted  to  pass 
from  the  hand  of  the  salesman  himself. 

Stationery  Items. — Every  effort  should  be  made  to  aid  the 
export  salesman  to  convince  each  prospective  purchaser  quickly 
and  thoroughly  of  the  desirability  of  the  parent  enterprise  as  a 
source  of  supply.  In  direct  consequence  of  this  important  truth 
every  care  should  be  taken  so  that  the  salesman  is  equipped 
towards  this  end  in  connection  with  his  business  cards,  his  personal 
cards,  cards  sent  in  advance  announcing  the  day  of  his  calls  and 
his  personal  stationery.  An  enterprise  may  be  so  well  known  in 
the  United  States  that  the  most  inexpensive  business  card  is 
ample  identification.  But  it  is  unsafe  to  assume  overseas  that 
other  than  a  genuinely  engraved  card  will  suffice.  Modern 
tendencies  lean  toward  color  embossing  combined  with  engraving, 
with  a  minimum  of  text,  for  the  lousiness  card  of  the  foreign 
traveler. 

The  Traveling  Library. — Condensed  information  of  general 
character  has  a  definite  place  in  the  equipment  of  the  foreign 
salesman.  Such  volumes  as  the  Export  Encyclopedia,  the 
specific  cable  code  used  for  messages,  and  a  compendium  of 
information  such  as  the  World  Almanac,  have  repeatedly  proved 
of  direct  value. 

In  preparing  the  salesman  for  the  field  the  four  most  important 
things  to  perfect  are  his  catalog  and  price  list,  his  samples,  his 
prospective  customers  sheets  and  his  salesman's  book.  These, 
plus  a  thorough  physical  examination,  are  prerequisites — if  the 
best  methods  are  to  be  accepted. 


128  EXPORT  MERCHANDISING 

ROUTING  THE  EXPORT  SALESMAN 

It  is  a  safe  prophecy  that  the  export  salesman  of  the  future 
will  be  better  routed  than  the  export  salesman  of  the  past. 

There  are  two  reasons  behind  this  prediction.  The  first  is 
that  the  export  salesmen  in  the  past  have  been  poorly  routed. 
The  second  is,  that  export  managers  are  turning  their  attention 
to  the  proper  routing  of  salesmen.  A  salesman  left  to  himself 
seldom  routes  himself  intelligently,  because  of  his  tendency  to 
cover  only  the  larger  markets,  and  to  neglect  the  smaller  cities 
and  countries  which,  combined,  are  perhaps  fully  as  valuable 
as  any  one  of  those  of  the  larger  centers.  For  this  reason  it  is 
seldom,  if  ever,  advisable  to  hire  the  export  salesman,  at  least  in 
his  early  years,  on  a  commission  basis.  To  do  this  is  to  work 
against  the  salesman's  pocket  book  and,  consequently,  against 
the  best  interests  of  the  partnership  composed  of  the  salesman 
and  the  manufacturer. 

To  cite  a  definite  example:  A  Western  manufacturer  found 
his  salesman,  when  given  the  territory  w-hich  includes  the  islands 
in  and  the  countries  bordering  on  the  Gulf  of  Mexico,  routing 
himself  so  that  he  would  visit  only  Havana,  San  Juan,  Caracas 
and  Panama.  When  correctly  re-routed,  experience  proved  that 
the  sales  in  the  territory  omitted  produced  four  times  as  great 
a  sales  volume  as  the  four  cities  the  salesman  had  selected. 

Details  for  the  Export  Manager. — When  the  salesman  is 
routed  correctly,  the  next  step  is  to  make  sure  that  he  will  visit 
in  the  cities  to  which  he  is  routed  all  the  most  desirable  prospec- 
tive customers.  This  happy  result  can  onlj'  come  by  the  closest 
cooperation  between  the  salesman  and  the  executive  in  charge 
of  the  manufacturer's  export  activities. 

The  average  export  manager  seldom  comes  to  his  title  with 
experience  in  securing,  training  or  routing  salesmen.  As  a 
result,  whenever  he  can  do  so,  he  plays  safe  in  securing  part  of 
the  services  of  an  experienced  export  traveler.  Often  he  himself 
Ijecomes  an  export  semi-salesman  for  no  other  reason  than  his 
lack  of  knowledge  of  the  vast  difference  in  function  l^etween  a 
salesman  and  a  sales  manager.  This  is  clearly  shown  in  the  cases 
in  which  a  sales  manager  or  an  executive  with  sales  managerial 
knowledge  and  instincts  takes  charge  of  the  export  development 
of  an  enterprise. 

Almost  invariably  one  of  his  first  steps  is  to  build  up  an  export 
sales  staff  of  travelers — which  is  usually  the  last  step  of  the 


PREPARING  THE  EXPORT  SALESMAN  FOR  THE  FIELD     129 

average  export  manager  who  has  nev(n-  handled  salesmen  before 
sitting  in  the  export  manager's  chair. 

Our  National  Investment. — It  has  been  estimated  tluit  the 
exporters  of  the  United  States  pay  more  than  ten  million  dollars  a 
year  in  traveling  expenses  of  out-and-out  export  salesmen,  and 
nearly  eight  hundred  thousand  dollars  more  for  traveling 
expenses  concealed  in  the  commissions  of  combination  export 
salesmen.  A  further  three  hundred  thousand  is  the  estimate  of 
traveling  expenses  of  executives,  tonnage  men  and  export  mana- 
gers. No  estimate  is  given  to  cover  salesmen  attached  to  branch 
houses  overseas  or  Canadian  travelers.  In  view  of  this  more  than 
eleven-million-dollar  annual  expense  for  sales  travel,  it  is  evident 
that  the  question  of  routing  is  a  most  important  one. 

Not  long  ago,  one  veteran  traveler  was  found  imposing 
shamefully  on  his  firm  by  visiting  in  person  only  Havana, 
Santiago,  San  Juan,  Ponce  and  Panama,  although  he  was  given 
credit  for  all  sales  in  the  islands  in  and  countries  bordering  on  the 
Gulf  of  Mexico.  His  line  was  competitive,  required  a  skilled, 
persistent  man  to  introduce  it  and  regular  visits  to  bring  volume. 
Even  with  agencies  his  personal  presence  was  needed  in  the  great 
majority  of  smaller  cities  in  his  territory  every  year,  and  in  the 
balance,  at  least  one  visit  every  other  year. 

Since  the  export  manager  was  inexperienced  in  his  position 
he  did  not  detect  the  imposition  at  a  glance.  The  salesman 
several  years  previously  had  recommended  the  appointment  of 
agencies  in  all  countries  except  Cul)a,  Porto  Rico,  Venezula  and 
Panama.  His  suggestions  had  been  adopted  ])ecause  of  his 
long  connection  with  the  House  and  sales  successes  in  the  South 
and  Southwest  of  the  United  States. 

Examples  of  Poor  Routing. — The  export  manager's  suspicions 
were  first  aroused  when  a  brother  export  manager  casually 
mentioned  a  cable  sent  by  his  salesman  when  he  was  in  Medellin. 
Investigation  proved  that  sales  in  Colombia  were  negligible.  A 
comparison  of  routes  resulted.  When  this  was  completed  it  was 
clear  that  not  one-fourth  of  the  cities  in  the  Gulf  territory  were 
even  visited.  Thus  it  proved  another  case  in  which  the  old 
story  of  a  veteran  export  salesman  and  a  new  export  manager 
was  repeated.  As  usual,  it  was  a  striking  proof  that  the 
export  salesman  who  routes  himself  slights  his  territory.  This 
is  no  reflection  upon  export  salesmen.     It  is  an  open  criticism 


130  EXPORT  MERCHANDISING 

of  any  .systcui  of  export  jilanning  that  docs  not  first  view  the 
world  as  a  whole  and  then  divide  th(^  workl  into  territories, 
many  of  which  call  for  sales  treatment  by  salesmen  at  some 
period  of  sales  development.  It  is  a  criticism  of  export  managers 
who  fail  to  put  each  country  logically  in  "salesman's  territory" 
under  the  microscope. 

Correct  routing  of  export  salesmen  involves  intensive  practical 
study.  It  places  on  the  shoulders  of  the  export  manager  a  most 
difficult  task.  There  is  no  one  royal  road  to  good  routing 
except  hard  work  and  intelligent  recording  of  the  results.  The 
problem  of  the  export  manager  is  to  profit  by  the  experience  of 
the  experienced. 

The  export  manager  of  today  therefore  routes  his  sales- 
man to  interior  cities  wherever  and  whenever  his  preliminary 
investigations  indicate  a  probability  of  profitable  sales. 

Then  he  paves  the  way  for  the  salesman's  visit. 


CHAPTER  XIII 

COOPERATION  WITH  THE  EXPORT  SALESMAN  IN  THE 

FIELD 

"There  is  no  law  wliioh  prevents  tlie  frequent  use  of  tlic  ral)|p  and 
the  mails  to  keep  tlie  salesman  in  touch  with  headquarters." 

— Herbert  B.  Maxwell. 

Advantages  of  Correct  Supervision  of  Field  Work.  How  to  Maintain 
Contact  at  a  Distance.  Registration  of  Salesman's  Cable  Addresses  Abroad. 
How  to  Secure  Prompt  Delivery  of  Mail.  Building  Prestige  for  the  Salesman. 
Detecting  and  Correcting  Weaknesses  of  Salesman  While  Overseas.  Use  of 
Cables  in  Cooperating  with  Field  Workers.  Letters  That  Inspire  Salesmen  to 
Best  Efforts.  Following  up  the  Work  of  the  Export  Salesman.  European  and 
American  Methods  Compared.  Reviewing  the  Field  with  the  Export  Salesman  on 
His  Return.  Ten  Guide-posts  for  the  Export  Manager  in  Checking  Field  Work. 
Dangers  Inherent  in  Hard  and  Fast  Rides.  Rigid  Policy  in  Production 
Proved  Costly.  Example  of  Important  Customer  Lost  by  Unwilliyigness  to 
Modify  Package.  Emergency  Measures  Which  Have  Won  Latin- American 
Merchants.     Profitable  By-products  of  Meeting  Wishes  of  Importers  Abroad. 

The  export  salesman  is  a  human  being.  He  has  his  strength 
and  his  weakness,  hke  all  human  beings.  With  the  increas- 
ing distance  from  his  headquarters,  he  feels  the  lack  of  the 
daily  intensive  training,  the  conferences  over  problems  real  and 
imagined,  and,  most  of  all,  he  misses  the  support  that  he  could 
always  rely  upon  in  his  trial  domestic  selling.  These  truths 
alone  justify  short  foreign  trips  before  the  test  of  the  long 
journeying.  They  drive  home  the  need  of  being  with  the  sales- 
man in  the  field. 

Proper  Supervision. — There  are  always  dangers  in  either  too 
great  strictness  or  entire  absence  of  supervision.  It  is  folly  to 
tie  a  man's  hands  and  expect  him  to  sell  goods.  It  is  equally 
foolish  to  permit  the  salesman  to  be  the  sole  judge  of  prices,  terms 
and  credits.  Somewhere  between  the  rigid  rules  that  leave  no 
play  for  the  salesman's  initiative  and  the  policy  that  loaves  the 
salesman  to  work  out  his  destiny  single-handed,  is  the  happy 
medium  each  exporting  manufacturer  should  seek  to  find.  The 
enterprise  which  feels  that  good  results  can  come  from  salesmen 
chafing  under  unwise  restraint  is  comparable  only  in  its  self-im- 
posed blindness  to  the  enterprise  which  expects  an  export  sales- 
man to  be  a  whole  export  department  in  himself. 

131 


182  EXPORT   MERCILWDL^IXC 

The  Salesman's  Cable  Addresses.  11  ic  tlosest  pos.sibic 
contact  with  the  export  salesman  in  tiie  ti(>l(l  is  only  half  satis- 
factory. Consequently,  every  effort  should  be  made  to  take  full 
advantage  of  all  existing  facilities  and  possibilities.  Before  the 
export  salesman  leaves — months  before,  in  fact — the  exporting 
manufacturer  should  register  the  cable  address  of  his  salesman  in 
every  city  he  is  to  visit.  This  will  cut  cable  bills  most  decidedly, 
and  it  will  encourage  cabling  because  of  the  lessened  expense. 
The  salesman,  by  means  of  a  private  code,  should  cable  l^y  a 
single  word  from  each  city  he  visits  his  complete  plans,  including 
length  of  stay,  whether  he  is  ahead  or  behind  schedule  and  how 
much,  the  state  of  his  health,  funds  and  samples  and  the  attitude 
of  agents  or  leading  dealers. 

Avoiding  Common  Mail  Difficulties. — Similar  care  should  be 
taken  to  ensure  safe  delivery  of  the  salesman's  mail.  Where  this 
cannot  be  addressed  in  the  care  of  some  friendly  customer  it 
can  often  be  sent  in  care  of  the  American  Consulate. 

Keeping  the  Salesman  Up  to  Date. — It  should  hardly  be 
necessary  to  point  out  that  carbon  copies  of  all  letters  to  custom- 
ers, and  carbon  copies  of  invoices,  should  be  mailed  promptly 
to  the  man  in  the  field.  He  should,  of  course,  be  kept  in  touch 
also  with  all  export  advertising  plans  which  affect  his  territory, 
and  sent  samples  of  any  new  dealer  literature  or  sales  helps  which 
can  be  used  effectively  by  him.  It  should  be  the  duty  of  the 
export  executive  to  acquaint  the  head  of  each  department  with 
the  wisdom  of  keeping  the  export  salesman  in  touch  with  their 
every  activity  which  could  be  of  interest. 

Creating  the  Proper  Atmosphere. — It  is  only  fair  to  the  export 
salesman  to  assure  his  standing  in  the  eyes  of  the  merchants  on 
whom  he  calls.  This  is  not  merely  a  matter  of  a  high  sounding 
title.  It  is  an  effect  only  produced  when  the  exporter  deems  his 
representative  worthy  of  trust  and  shows  this  respect  in  his 
correspondence,  in  the  manner  in  which  his  salesman  travels,  in 
the  many  little  things  such  as  the  use  of  catalogs  lettered  in  gold 
with  the  salesman's  name,  in  the  quality  of  the  salesman's  cards 
and  advance  cards,  in  the  manner  in  which  the  manufacturer 
refers  to  the  salesman  in  his  letters  and  in  the  manner  in  which 
the  exporter  Hves  up  to  the  dealer's  requests  when  granted  by  the 
salesman.  A  good  salesman  deserves  this  respect  and  backing. 
The  poor  salesman  should  never  have  been  permitted  to  repre- 
sent the  manufacturer. 


COOPERAriON  WITH  THE  SALESMAN  188 

Detecting  Field  Weaknesses. — It  is  not  easy  to  detect  and 
correct  the  weaknesses  of  salesmen  when  in  the  field.  Even  well- 
known  local  conditions  may  change  quickly,  making  the  test 
based  on  results  of  no  value  and  of  great  unfairness.  The  spy 
system  never  worked  well  at  home  or  abroad.  It  is  a  degrada- 
tion of  both  the  exporter  and  the  salesman  unless  justified  by 
unusual  circumstances.  But  in  the  salesman's  reports — in  the 
printed  words  and  between  the  lines  of  the  printed  words — there 
is  much  that  can  be  read.  The  very  tone  of  letters,  of  comments 
made  in  returning  the  prospective  customer  sheets,  is  enough  to 
tell  much  of  the  salesman's  work  in  the  field. 

Use  of  the  Cable. — Any  carelessness  in  clerical  accuracy,  any 
failure  to  make  special  reports  which  have  been  asked  for,  any 
long  delays  or  shortened  stays  not  explained  in  the  coded  cables 
and  an  over-abundance  of  excuses  create  a  situation  which  the 
export  executive  must  face.  Then,  if  ever,  the  cable,  regard- 
less of  cost,  is  none  too  satisfactory.  For  in  the  cold  medium  of 
the  cable  it  is  hard  to  put  the  note  of  encouragement  and  of 
confidence  needed  to  revivify  the  flagging  spirit  of  the  discouraged 
salesman  thousands  of  miles  away  from  a  friendly  handclasp. 
And  it  is  infinitely  harder  to  convey  constructive  criticism  by 
cable  in  the  cases  where  only  by  such  criticism  can  a  salesman  be 
saved  from  the  result  of  his  own  weaknesses  or  errors. 

Anticipating  the  Probable. — The  need  is,  therefore,  to  antici- 
pate the  possible  and  the  probable.  Many  an  export  salesman, 
veteran  as  well  as  novice,  has  been  lifted  from  depression  by 
finding  on  arrival  at  port  a  letter  free  from  all  except  news, 
gossip  and  the  friendliest  of  spirits.  Many  a  salesman  has 
found  inspiration  in  the  letters  suggesting  certain  ways  to  meet 
changed  competitive  conditions  and  which  showed  from  saluta- 
tion to  closing  a  spirit  of  partnership  effort  and  of  positive 
belief  that,  no  matter  what  obstacles  might  interpose,  the 
salesman  had   the   knowledge  and  energy  to  overcome  them. 

Keeping  in  Touch  with  the  Salesman. — There  is  still  a  fear  of 
free  use  of  the  cable  in  advising  salesmen  of  new  policies  and 
prices,  products  and  added  lines.  It  would  result  in  more  and 
longer  cables  if  the  cost  was  rigidly  compared  with  the  probable 
results.  The  export  salesman  who  receives  frequent  cables  is 
certain  to  realize  that  he  is  being  kept  in  mind.  This  certainty 
on  his  part  brings  his  efforts  to  a  higher  level,  for  he  knows  that 
distance    has    not    meant   forgetfulness.     He    realizes   that   his 


134  EXI'ORT  MERCUANDltilNG 

work  is  .still  under  observation.  He  knows  that,  far  or  near 
from  home,  his  house  is  working  with  him  and  is  not  fearful  that 
the  expense  will  not  be  justified.  The  export  salesman  in  the 
field  is  only  out  of  control,  out  of  range  of  aid,  out  of  the  activities 
of  the  organization  so  far  as  the  restrictions  of  the  mails  and 
cables  erect  a  barrier.  The  good  exporter  realizes  the  needs  of 
the  salesman  in  the  field  and  is  willing  to  spend  brains  and  money 
to  offset  these  mechanical  difficulties. 

FOLLOWING  UP  THE  EXPORT  SALESMAN 

"The  real  follow-up  begins  only  when  the  trail  has  been  discovered. 
The  hound  cannot  catch  rabbits  where  none  exist." 

— Louis  Victor  Eytinge. 

One  of  the  ablest  business  men  and,  at  the  same  time,  one  who 
furnished  one  of  the  most  spectacular  of  failures  two  decades 
ago,  when  asked  the  reason  for  his  downfall,  said:  "I  had  no  one 
to  pick  up  the  chips  left  in  the  paths  I  hewed." 

Profit  consists  of  that  which  is  surplus  after  returns  have 
cancelled  expenditures.     Profits  are  the  chips  left  in  the  path. 

Capitalizing  the  Salesman's  Efforts. — In  this  truth  can  be 
seen  the  importance  of  skilfully  following  up  the  work  of  the 
export  salesman.  In  many  cases  it  means  the  difference  between 
profit  and  loss — particularly  on  initial  trips  when  the  investment 
is  the  greatest  and  the  immediate  returns  are  the  least.  The 
best  of  salesmen  cannot  hope  to  overcome  circumstances  in 
every  case.  A  recent  arrival  of  a  heav}^  consignment  of  com- 
petitive goods  may  make  the  securing  of  an  order  impossible 
at  the  time.  The  skilful  following  up  of  the  salesman's  visit 
may,  however,  make  the  consignment  which  blocked  the  sale 
the  last  of  any  of  other  than  the  goods  the  salesman  so 
convincing!}^  portrayed  and  in  which  the  "follow-up  letters" 
maintained  interest. 

When  the  Salesman  Cannot  Close  the  Sale. — The  buyer  may 
be  out  or  ill;  a  recent  fire  or  even  a  national  disaster  (such  as  an 
earthquake,  tornado  or  volcanic  eruption)  may  have  barred  the 
salesman  from  immediate  orders.  But  the  information  gained 
and  the  accjuaintance  made  can,  in  even  these  cases,  be  capitalized 
to  ultimate  success  by  the  following  up  of  the  trail.  Half-made 
sales — which  remain  behind  even  the  best  of  salesmen — may 
be  consummated  by  the  sales  appeal  directed  at  the  point 
the  salesman  felt  to  be  most  vulnerable.     Additional  items  to 


.2   '^ 


COOPERATION  WITH  THE  SALESMAN  135 

orders  secured  can  often  be  added,  particularly  when  the  order  is 
divided  into  several  parts  shipped  at  wide  intervals. 

Following  up  the  Trial  Order. — Sample  or  trial  orders  of 
moderate  size  are  a  particularly  prolific  field  for  the  efforts  of  the 
export  executive.  Here  the  salesman  has  gained  a  footing,  but 
has  been  unable  to  ensure  complete  pai'tnership.  The  handling 
of  the  trial  order  and  the  selling  of  the  mutual  advantages  of 
further  and  larger  transactions  supplies  one  of  the  most  fas- 
cinating problems  which  it  is  the  good  fortune  of  the  export  man 
to  solve. 

Where  European  Methods  Are  Incomplete. — It  is  repeated 
here  that  the  major  difference  between  the  selling  methods  of 
American  and  European  manufacturing  exporters  lies  in  the 
fact  that  the  American  manufacturer  actively  assists  the  foreign 
merchant  to  move  the  goods  from  his  shelves.  No  small  part 
of  this  important  work  must  be  done  by  following  up  the  educa- 
tional work  started  by  the  export  salesman.  It  is  not  fair  to 
desert  the  salesman  and  ship  the  advertising  material  without 
comment.  Even  repetition  of  the  salesman's  suggestions  in 
regard  to  windows,  counters,  aisles  and  shelves  is  entirely  wise. 
The  plans  for  distribution  of  samples  and  booklets  are  equally 
worthwhile  subjects  for  letters,  and  the  tying  up  of  the  mer- 
chant's establishment  with  local  and  other  advertising,  justifies 
emphasis  and  explanation  of  the  most  successful  methods 
emploj'ed  by  merchants  in  other  countries. 

Between  Salesman's  Trips. — The  cardinal  rule  for  following 
up  is  to  ensure  that  each  customer's  mind  is  kept  on  the  manu- 
facturer's products  in  a  way  to  result  in  maximum  sales  between 
salesman's  visits  and  to  secure  as  customers  every  prospect 
which  the  salesman  reports  as  a  worthy  connection.  Between 
salesman's  visits  the  exporter  should  become  so  well  acquainted 
with  his  customers  and  prospective  customers  that  the  salesman 
becomes  the  binding  link  in  the  relationship  rather  than  the  only 
common  point  of  interest. 

Following  up  the  export  salesman's  visits  is  not  a  task  for  the 
clerk.  It  demands  the  best  brains  of  the  most  skillful  of  mer- 
chandisers before  its  actual  execution  can  be  safely  and  wisely 
entrusted  to  others. 


]'M)  EXPORT  MERCHANDISING 

REVIEWING  THE  FIELD  WITH  THE  EXPORT  SALESMAN  ON    HIS 

RETURN 

"The  time  you  slinuld  be  cldscst   to  your  salcsuiaTi  is  on  liis  ictui'ii 
from  a  loiif;  trip." — Ci.  Morton  Thurston. 

The  time  to  secure  and  record  impressions  is  when  these  are 
freshest  and  most  clear.  The  export  salesman  should,  there- 
fore, report  direct  to  the  export  executive  immediately  on  his 
return  from  each  trip,  and  not  be  permitted  to  follow  his  natural 
inclination  to  take  his  rest  or  vacation  period  at  once. 

Matters  to  Discuss. — No  matter  how  accurate  or  how  com- 
plete reports  arc  sent  in  by  mail  and  cable,  there  are  many 
questions  which  should  be  asked  and  answered.  There  are 
plans  for  future  developments  which  should  be  discussed,  in  order 
that  they  may  progress  while  the  salesman  is  recuperating. 
There  are  many  points  on  which  the  export  salesman's  opinion 
should  be  sought  and  secured,  not  only  by  the  export  executive 
but  also  by  the  heads  of  the  several  departments  directly  and 
indirectly  interested  in  foreign  as  well  as  domestic  fields. 

Ten  Guide  Posts. — The  ten  points  which  are  enumerated 
below  are  guide  posts.  They  are  by  no  means  a  complete  guide, 
since  they  purposely  omit  such  vital  matters  as  criticism  of 
packing,  invoicing  and  collection  methods. 

1.  Analysis  by  salesman  of  each  city  and  country  he  has  visited — - 
stenographic  transcription  of  questions  and  comments  made  for  permanent 
files 

2.  Analysis  by  customers  checking  up  records,  including  individuals 
within  firms  to  whom  correspondence  should  be  addressed  and  diagnosis 
of  buyers'  preferences  and  dislikes 

3.  Adjustment  of  any  claims  not  already  a  matter  of  record 

4.  Salesman's  criticism  on  general  export  sales  helps,  advertising  plans 
and  past  or  proposed  sales  policies 

5.  Salesman's  criticism  of  past  or  proposed  promotion  work  in  his 
territory 

6.  Betterment  of  any  practices  or  forms  affecting  territory  as  a  whole 

7.  Review  of  use  of  samples  carried  and  decision  on  samples  for  succeed- 
ing trip 

8.  Salesman's  estimate  of  sales  possibilities  in  his  territory  and  his 
suggestions  as  to  methods  to  be  employed  in  order  to  develop  these  possi- 
bilities both  rapidly  and  econ(.)mically 

9.  Cities  not  visited  within  territory  which  should  be  visited  on  succeed- 
ing trip  and  method  for  preparation  of  these  new  fields 

10.  Necessities  for  salesman's  territory  as  a  whole  before  succeeding 
trip. 


COOPERATION  WITH  THE  SALESMAN  137 

Cooperation  with  the  export  salesman  ean  only  be  said  truly 
to  exist  when  it  is  the  whole-heaited,  l)roa(l-vision(Ml,  persistcMit 
effort  of  president  and  office  boy,  and  all  between  these  stations, 
to  make  the  salesman's  efforts  bring  the  greatest  net  profits  over 
a  long  term  of  years.  The  export  salesman  who  is  given  this 
type  of  cooperation  is  an  excellent  investment. 

"DON'T  TIE  A  MAN'S  HANDS  AND  EXPECT  HIM  TO  SELL  GOODS!" 

A  feeling  of  utter  helplessness  comes  over  a  salesman  when  his 
hands  arc  tied  hard  and  fast  by  his  house  and  a  large  oider 
hinges  on  some  slight  deviation  from  standing  instructions  of  the 
home  office. 

As  a  concrete  example:  In  1918,  a  thoroughly  competent 
salesman  was  selling  from  Para,  Brazil,  to  Guayaquil,  Ecuador, 
eight  carefully  selected  lines  which  appealed  especially  to 
the  drug  trade.  One  was  an  excellent  line  of  perfumes  and  toilet 
waters.  The  salesman  took  an  order  in  Pernambuco  which 
specified  that  a  certain  expensive  full-bloom  rose  perfume  be 
packed  in  grosses  in  wooden  boxes,  instead  of  in  dozens  in  counter- 
display  boxes  as  listed. 

The  Canceled  Item. — When  the  salesman  got  to  Montevideo 
he  learned  that  this  item  had  been  canceled,  and  a  letter  received 
by  him  read:  "We  must  repeat  our  instructions  and  lay  down  a 
hard-and-fast  rule  that  the  specifications  in  our  1917  catalog  are 
to  be  followed  in  every  instance.  Without  a  doubt,  if  you  had 
borne  our  wishes  in  mind  you  could  have  sold  the  item  in  question 
in  regular  dozen  packing." 

It  is  not  necessary  to  quote  the  rest  of  the  letter.  It  was 
logically  worded.  But  the  fact  remained  that  that  order  had 
hinged  on  figuring  out  that  the  Pernambuco  firm  could  buy  this 
line  cheaper  than  that  of  a  French  competitor  by  use  of  the  special 
packing  asked  for  in  the  order.  For  this  special  packing  Vo\)\ 
down  the  duty  in  two  distinct  ways.  On  one  hand  this  permitted 
a  perfectly  legitimate  classification  escaping  a  clause  on  "and 
their  immediate  receptacles  plus  any  cartons  or  boxes  not  a  part 
of  necessary  protection  in  transit."  On  the  other  hand,  the 
packing  avoided  a  clause  regarding  "lithogia])hetl  cartons 
whether  or  not  containing  saleable  products." 

The  salesman  had  worked  these  niceties  out  at  night  from 
the  original  Portuguese  by  a  cheap  hand  lamp,  for  the  hotels 


138  EXPORT  MERCHANDISING 

were  in  quarantine  just  then  and  he  had  had  to  sleep  in  a  sani- 
tarium. To  have  some  one,  on  the  grounds  of  "pohcy,"  turn 
down  a  less  expensive  packing  and  a  $400  order,  merely  to  teach 
the  salesman  a  lesson  in  selling  goods,  was  rank  injustice  to  the 
salesman. 

HANDLING  UNUSUAL   SITUATIONS 

Another  illustration:  A  veteran  salesman  interested  the  best 
and  biggest  wholesale  druggist  in  Buenos  Aires  to  the  extent  of 
looking  at  his  line  of  samples.  It  was  after  a  game  of  billiards 
that  the  salesman  opened  his  perfume  sample  trunk.  The  line 
was  attractive.  He  sold  several  dozen  items  without  removing 
the  bottles  from  their  blue  velvet  compartments. 

Then  the  buyer  began  to  pick  and  choose  and  the  items  came 
one  by  one.  Finally,  he  held  a  bottle  in  each  hand  and  turned 
saying:  "John,  here's  something  I  can  sell — this  wisteria,  only 
with  the  fan  stopper  on  this  arbutus."  While  the  salesman 
argued  against  the  change  the  buyer  had  exchanged  stoppers, 
which  were  the  same  size.  Like  a  genius  at  the  moment  of  his 
first  invention,  he  gazed  with  mother  love  at  the  new  combination 
admiration  fairly  streaming  from  his  eyes,  and  continued: 
"Put  down  300  dozen  and  leave  me  this  sample,  and  I'll  write  you 
a  repeat  for  more  before  you  get  out  of  Santiago." 

The  salesman  could  see  the  buyer's  interest  in  the  whole  line 
ooze  out  as  he  failed  to  respond  to  the  rhapsodies,  and  he  knew  if 
the  buyer  were  told  that  the  order  for  his  personal  combination 
could  not  be  accepted,  all  was  lost.  He  sent  a  $25  cable  at  his 
own  expense,  mostly  in  code,  only  to  get  a  one-word  negative 
reply  to  his  request.  The  veteran  salesman's  reply  was  equally 
crisp:  "I  resign.  Letter  follows."  That  cable  enabled  him  to 
interest  his  friend  in  his  other  lines. 

One  correct  method  of  handling  unusual  requests  is  chosen  from 
the  files  of  a  San  Francisco  manufacturer.  A  salesman  was  in 
Iquique  when  one  of  his  customers  handed  him  a  letter  just  in 
from  the  United  States.  The  first  paragraph  was  in  good  Span- 
ish and  apologized  politely  for  the  use  of  English  in  the  balance  of 
the  letter.  The  letter  explained  that  this  was  necessitated  in 
order  to  catch  the  mail  and  save  a  fortnight. 

In  a  simple,  straightforward  manner  the  manufacturer  explained 
that  a  certain  container  ordered  by  the  Chilian  importer  was 


COOPERATION  WITH  THE  SALESMAN  139 

only  customarily  supplied  for  a  certain  stylo  of  licjuid.  In 
consequence,  labels  up  to  their  standard  of  attractiveness  were 
unfortunately  not  available.  The  letter  expressed  the  courtesy 
of  their  patronage  and  advised  that  by  having  a  special  die  made 
they  were  cutting  the  border  from  a  label  used  on  another  style, 
which  they  felt  would  prove  satisfactory,  and  trusted  that  their 
efforts  would  not  prove  displeasing.  This  treatment  pleased  the 
customer  and  put  heart  in  the  salesman. 

Domestic  Profits  from  Export  Experiments. — This  same 
American  manufacturer,  at  the  urgent  request  of  one  of  its 
European  salesmen,  produced  an  item  to  retail  at  sixpence  to 
meet  local  competition  in  England  for  a  good  customer.  Not 
only  were  its  efforts  successful,  but  it  proved  a  better  package 
than  the  regular  domestic  10-cent  size  and  at  $1  a  gross  less  cost. 
This  saving,  with  its  better  appearance,  caused  its  immediate 
adoption  in  the  United  States. 


CHAPTER  XIV 
THE  COMBINATION  EXPORT  SALESMAN 

"The  coMibination  export  salesman  is  one  of  the  oldest  methods 
of  selling.  At  his  best  he  has  reached  real  heights.  But  he  violates 
a  first  principle  of  salesmanship — concentration." — C.  P.  Cooper. 

Two  Main  Types.  Use  of  Combination  Salesmen  not  a  Netv  Idea.  Assets 
of  Combination  Travelers.  Why  They  Seek  to  Hold  Control  of  Their  Customers. 
The  Combination  Salesman  Resident  Abroad.  How  He  Differs  from  Combina- 
tion Traveler.  Example  of  Territories  Covered  and  Methods  Employed. 
Recent  Developments  in  Combination  Field.  How  to  Create  and  Control  Good 
Combination  Travelers.  Subletting  of  Salesmen  by  Manufacturers.  Method 
of  Division  of  Salary  and  Expenses.  Effectiveness  of  Modern  Combination 
Salesman  Compared  to  One-line  Traveler. 

There  are  two  t3^pes  of  combination  export  salesmen: 

1.  The  combination  traveling  salesman  visiting  the  country  of  his 
employer  at  regular  intervals 

2.  The  combination  salesman  resident  abroad 

The  combination  export  salesman  returning  to  headquarters 
at  regular  intervals  is  perhaps  the  oldest  and  perhaps  the  latest 
type  of  export  traveler.  Certainly,  years  l^efore  it  was  a  general 
practice  for  manufacturers  to  send  out  salesmen,  there  were  the 
sales  adventurers  who  carried  the  lines  of  groups  of  manu- 
facturers. In  the  early  days,  lines  were  selected  at  haphazard 
wherever  the  traveler  coukl  find  a  spirit  bold  enough  even  to 
consider  sales  abroad.  The  same  salesman  in  one  case  sold 
flour,  egg  beaters,  pencils,  cotton  goods  and  razors — not  to  men- 
tion heavy  machinery!  In  the  early  days,  the  combination 
salesmen  was  all  but  invariably  on  commission.  Sometimes  he 
exacted  a  modest  expense  allowance  in  addition  to  commis- 
sions or,  in  still  rarer  cases,  expenses  were  advanced  against 
prospective  commissions. 

The  Independent  Traveler. — Until  very  recently,  this  original 
conception  of  the  combination  salesman  has  held  full  sway — 
a  man  big  enough  to  handle  many  lines  and  an  experienced 
traveler  with  a  wide  acquaintance  in  the  trade.  In  effect,  the 
combination  salesman  really  dominated  his  connections,  both 
inak(M'  and  buyer.     He  selected  the  lines  he  wished  to  sell  and 

140 


THE  COMBINATION  EXPORT  SALESMAN  141 

neither  asked  nor  wanted  any  paitieular  assistance  except  rigid 
carrying  out  of  his  instructions.  On  his  annual  visits  to  the 
factories  of  the  manufacturers  whose  products  he  sold  the  export 
traveler  spent  nuich  time  with  the  head  shipper,  laying  down  the 
law  on  export  packing.  He  spent  much  time  with  the  treasurer, 
describing  export  drafts  and  talking  over  export  collections. 
He  usually  insisted  on  buying  the  president  a  good  luncheon. 
He  never  had  time  for  anyone  to  offer  to  help  him — and  he  would 
almost  have  laughed  had  such  an  offer  been  made. 

His  Stock  in  Trade. — This  type  of  combination  salesman  still 
exists — in  fact,  probably  seven-eighths  of  the  combination  sales- 
men are  more  or  less  obviously  of  this  type.  Their  stock  in 
trade  can  easily  be  classified  in  order  of  importance : 

1.  Ability  as  salesmen 

2.  The  ignorance  of  their  employers 

3.  Intimacy  with  established  trade  outlets 

4.  Knowledge  of  export  technique. 

Keeping  the  Manufacturer  in  Ignorance. — Note  that  next  to 
their  ability  as  salesmen,  is  ranked  "The  ignorance  of  their 
employers."  Remember  that  it  is  a  part — a  large  part — of 
the  old  style  combination  salesman's  assets.  For  just  so  long 
as  the  manufacturer  remains  in  ignorance,  just  so  long  can  the 
combination  export  salesman  dominate  the  situation.  As  one 
able  combination  salesman  stated  several  years  ago,  "I  even 
guarantee  the  complete  collection  of  all  accounts  sent  in  by  me, 
rather  than  have  any  member  of  any  concern  I  represent  come 
to  know  more  of  my  customers  than  what  they  need  to  know  to 
ship  goods — their  names  and  addresses.  I  purposely  instruct 
that  only  letters  absolutely  necessary  be  written.  I  have  printed 
forms  for  acknowledgment  of  orders  and  advice  of  shipments 
I  urge  my  customers  to  write  or  cable  me  (my  own  cable  addresses 
are  over  two  hundred)  wherever  my  route  shows  them  I  may  be." 

Semi-direct  Representation  a  Luxury. — It  nnist  l)e  appaieiit 
from  this  frank  statement  that  only  firms  whos(>  interest  in 
export  selling  is  academic  rather  than  practical,  can  afford  the 
luxury  of  such  representation.  It  is  only  fair,  however,  to  state 
clearly  that  there  have  been  some  wonderfully  competent  sales- 
men— men  like  Bouin  and  Chapman,  who  have  owned  shoulders 
broad  enough  to  support  the  entire  merchandising  burden. 
These  better  salesmen,  particularly  in  recent  3'ears,  have  so 
keenly  felt  the  competition  of  exclusive  salesmen  backed  by  the 


142  EXPORT  MERCHANDISING 

export    manager   of   al)ilit3\     In   consequence,    they   now   seek 
cooperation.     They  ask  for  sales  assistance. 

The  Strength  of  the  Salesman's  Position. — It  is  entirely 
natural  for  the  combination  export  salesman  to  seek  to  own  and 
control  "his"  customers  and  ''his"  manufacturers.  His  coming 
dates  back  to  days  when  there  were  no  established  and  good 
American  export  methods.  Only  by  dominating  the  situation 
could  the  combination  export  salesman  feel  at  all  sure  that  goods 
would  be  billed,  shipped  and  packed  correctly.  On  the  other 
hand,  the  less  the  contact  between  actual  buyer  and  seller,  the 
stronger  the  salesman's  position.  If  a  manufacturer  balked  at 
commissions,  or  proved  to  l)e  in  any  other  way  undesira])le  to  the 
salesman,  then,  clearly,  the  less  he  knew  about  the  buyer  the  less 
chance  he  had  to  hold  him  against  the  salesman's  intimate 
relations. 

THE  COMBINATION  SALESMAN  RESIDENT  ABROAD 

The  combination  salesman  resident  abroad  is  the  half-brother 
of  the  manufacturer's  representative  resident  abroad  who  does 
not  carry  stock.  The  outstanding  difference  is  clearly  illus- 
trated, however,  by  pointing  out  that  the  manufacturer's 
representative  usually  has  offices  continuously  open  at  a  fixed 
address.  The  headcjuarters  of  the  coml)ination  salesman  resident 
abroad  is  usually  his  home.  He  does  not  maintain  offices  and  he 
travels  far  more  widely,  and  during  a  greater  portion  of  the 
year,  than  does  the  usual  manufacturer's  representative. 

The  Two  Classes. — The  combination  salesman  resident  abroad 
falls  naturally  into  one  of  these  two  classes — the  group  which 
confines  its  travels  to  a  single  country,  and  the  other  group  which 
has  headquarters  in  one  country  but  travels  in  few  or  many  other 
countries.  The  deciding  factor  for  or  against  wide  travel  from 
foreign  headquarters  is  more  generally  the  product  than  the 
territory.  But  there  is,  nevertheless,  a  generous  sprinkling  of 
cases  where  the  number  and  character  of  the  population  clearly 
decide  this  often  difficult  problem. 

Examples  of  Differences. — The  two  types  can  be  illustrated 
by  pointing  out  that  France,  Argentina,  Cuba  and  Mexico  are 
quite  commonly  considered  ample  year-around  fields  of  endeavor 
by  the  export  combination  salesman.  Others  will  group  all 
countries  on  the  Gulf  of  Mexico  as  fair  territory,  and  establish 


THE  COMBINATION  EXPORT  SALESMAN  143 

headquarters  in  Panama  or  Caracas.  It  is  not  uncommon  for 
such  men  to  take  China  alone  or  to  combine  AustraHa,  Tasmania 
and  New  Zealand.  At  least  one  ambitious  salesman  makes  his 
"  one-month-a-year  "  headquarters  in  Amsterdam,  and  travels  in 
Belgium,  France,  Spain,  Portugal,  Algiers,  Tunis,  Italy  and 
Switzerland.  The  salesman  in  mind  handles  four  closely-allied 
lines  and  knows  even  the  children  of  his  customers,  by  age  as  well 
as  name.  He  can  travel  easily  and  yet  do  justice  in  eight 
countries  to  all  four  products. 

Modern  Developments. — There  are  two  recent  developments 
in  connection  with  the  combination  export  salesman.  It  is 
entirely  safe  to  call  them  "recent,"  even  in  the  face  of  sporadic 
cases  more  than  a  hundred  years  ago,  because  the  older  cases 
were  occasional  and  entirely  without  influence  on  current  or 
following  sales  methods.  It  will  be  remembered  that  thus  far  in 
this  discussion  the  fact  has  been  emphasized  that  the  combina- 
tion export  salesman  sought  out  his  manufacturing  accounts, 
instructed  them  and  dominated  them.  This,  to  a  greater  or 
lesser  degree,  covered  every  case.  For  only  by  good  fortune 
could  a  maker  locate  a  combination  salesman  when  he  wanted  to 
make  arrangements  with  one. 

DEVELOPING  THE  COMBINATION  EXPORT  SALESMAN 

-  The  newer  plan  exactly  reverses  the  process.  The  individual 
exporting  manufacturer  hires  promising  material.  Then  he 
first  makes  a  salesman  out  of  the  material,  then  an  export 
salesman — and  finally  a  combination  export  salesman.  To 
impress  this  on  our  minds  let  us  present  the  process  vertically 
in  tabular  form : 

1.  Untrained  man 

2.  Salesman 

3.  Export  salesman 

4.  Combination  exjjort  salesman. 

It  will  be  interesting,  later,  to  compare  this  newer  type  of 
combination  export  salesman  with  the  direct-from-headquarters 
exclusive  salesman.  From  this  comparison,  coupled  with  a 
knowledge  of  the  exclusive  salesman  resident  abroad,  each  export 
manager  can  test  his  own  needs  against  the  best  selection  of 
salesman  types. 

Elimination  of  Economic  Waste. — What  are  the  conditions 


144  EXPORT  MERCHANDISING 

wliich  justify  the  couvortiug  of  an  exclusive  salesman  into  a 
combination  salesman?  The  only  truly  sound  answer  is,  "To 
prevent  decided  economic  waste."  The  exclusive  salesman 
should  remain  an  exclusive  salesman,  from  the  standpoint  of 
the  employer  certainly,  so  long  as  there  is  fair  opportunity  for 
accomplishment.  In  cases  where  his  original  territory  can 
wisely  be  increased,  it  is  usually  far  better  to  add  to  his  range 
than  to  share  him  with  others.  It  is  a  safe  rule,  when  in  doubt, 
to  keep  the  exclusive  salesman  an  exclusive  salesman. 

QUALIFICATIONS  ESSENTIAL  IN  THE  COMBINATION 
TRAVELER 

There  is  a  decided  difference  in  salesmen.  Some  men  who 
make  good  exclusive  salesmen  do  not  work  at  all  well  with 
a  divided  allegiance.  Others  find  themselves  quite  imable 
to  grasp  and  hold  details  of  more  than  one  line.  A  large  number 
of  salesmen  take  so  much  and  so  just  pride  in  their  original 
employer  that  they  simply  camiot  do  justice  to  any  newcomers. 
The  export  manager  should  be  sure  that  he  knows— and  not 
guesses — the  salesman's  viewpoint  before  planning  too  seriously 
on  changing  the  salesman's  duties  radically. 

The  Capacity  for  Friendships. — The  type  that  makes  the  best 
combination  salesman  wins  his  customers  quickly  by  his  own 
capacity  for  genuine  friendships.  Merchants  buy  the  initial 
purchases  often  for  the  sole  reason  that  they  like  him  and  trust 
him.  As  it  soon  transpires  that  he  tells  the  truth  and  that  his 
products  are  also  reliable,  the  actual  taking  of  the  order  each 
trip  becomes  a  minor  episode.  The  relation  becomes  at  least 
three-quarters  personal  to  one-quarter  commercial.  This  period 
may  easily  come  with  the  third  trip.  By  the  fifth  trip  it  fre- 
quently happens  that  such  a  salesman  has  solved  the  problems  of 
creating  local  consumer  demand,  and  his  products  dominate 
the  market.  His  time  is  so  poorly  filled,  from  a  business  angle, 
that  where  once  the  month  between  sailings  was  all  too  short,  it 
now  ])e('omes  three  weeks,  two  weeks  or  a  week  too  long. 

SUB-LETTING  THE  SALESMAN 

The  modern  export  manager  anticipates  such  a  condition  and 
plans  so  that  with  his  salesman  the  waste  does  not  occur.  The 
modern  export  manager  seeks  and  finds,  and  not  infrequently 
is  himself  sought  and  found.     In  some  allied  line  which  should 


THE  COM RI NATION  EXl'ORT  SALESMAN  145 

be  sold  thiough  identical  outlets  he  finds  an  export  executive 
with  a  worthy  product  and  a  lil)eral  polic}^  who  needs  direct 
representation.  Then  the  modern  export  manager  sub-let.s  a 
definite  portion  of  his  salesman's  time.  This  sub-letting  forms  the 
greatest  difference  between  the  old-time  combination  export 
salesman  "who  was  his  own  boss  and  traveled  on  his  own  time" 
and  the  new  type  that  has,  at  least,  limited  further  growth  of  the 
older  type. 

Avoiding  Divided  Authority. — The  sub-letting  of  a  part  of  a 
salesman's  time  is  the  fair  way  to  the  salesman,  because  there  is 
no  divided  authority  or  responsibility.  The  first  export  manager 
lays  out  the  route,  explains  the  salary  and  expense  management, 
defines  clearly  vacation  privileges  allowed  and  invites  the 
second  export  manager  to  lease  the  available  amount  of  services. 
Usually  the  first  export  manager  has  so  well  analized  the  field 
and  the  needs  of  the  second  export  manager  that  only  a  con- 
ference and  a  confirming  letter  are  needed.  Now  and  then  a 
slight  change  in  routing  is  made  to  meet  some  special  and  perhaps 
temporary  need  of  the  second  export  manager. 

Division  of  Salary  and  Expenses. — It  is  usual  for  the  expenses 
and  salary  and  time  to  be  divided  equally,  the  original  employei- 
contracting  with  the  salesman,  paying  his  entire  salary  and 
providing  him  with  a  letter  of  credit  or  other  type  of  funds  for 
traveling  expenses.  Each  month  the  original  employer  bills  the 
other  exporter  with  his  share  of  salary  and  expenses.  The 
only  exceptions  to  the  pro  rata  division  of  expenses  (which 
are  reported  only  to  the  original  employer,  who  then  advises 
the  other  exporter)  are  in  cases  where  expense  is  obviously 
incurred  for  the  special  benefit  of  either  exporter.  Such  expenses 
would  include  orders  cabled,  other  special  cables,  duties  and 
excess  freight  on  samples  (where  samples  were  une(iually  divided 
in  number  of  trunks  or  weight),  entertainment  of  a  prospective 
customer  for  some  reason  impossible  for  but  one  of  the  pair — 
expenses  clearly  and  indisputably  for  the  sole  benefit  of  one  and 
not  the  other. 

Limiting  Lines  Carried. — It  is  seldom  advisable  to  add  mon* 
than  one  line  at  a  time.  The  exceptions  are  usually  dictated 
by  the  natur(>  of  the  products,  such  as  the  fact  that  they  are 
novelties  which  require  only  presentation,  or  minor  lines  which 
involve  no  technical  knowledge  in  selling.  It  is  not  at  all 
unusual  today  for  the  employer  of  a  good  coml)i nation  sales- 

10 


146  EXPORT  MERCHANDISING 

man  of  the  new  school  to  add  products  until  perhaps  three 
or  even  four  major  lines,  and  from  two  to  six  novelties,  are 
ably  handled  by  the  single  salesman  by  his  tenth  trip. 

This  extreme  comes  only  when  all  lines  have  the  same  trade 
outlets  and  actually  help  to  sell  each  other.  Such  a  large  number 
of  lines  is  highly  unwise  until  or  unless  the  very  great  majority 
of  importers  look  upon  the  salesman  more  as  a  buyer  for  them 
than  as  a  salesman  for  anyone  else. 

A  Three-cornered  Partnership. — One  of  the  best  arrangements 
is  a  three-cornered  partnership  with  two  lines  having  identical 
customers,  and  a  third  line  with  customers  within  the  group  of 
the  first  two  but  at  least  half  just  outside  this  group.  The  beauty 
of  this  type  of  arrangement  in  the  hands  of  a  good  salesman  is 
that  it  inevitably  leads  to  wider  representation  for  all  three 
houses.  The  salesman  naturally  sees  the  opportunities,  for 
example,  that  a  drug  house  is  losing  in  not  featuring  stationery, 
and  that  a  notion  house  is  losing  in  not  featuring  toilet 
preparations. 

The  Road  to  Increased  Compensation. — The  new  type  of 
"combination  salesman  plan"  is  particularly  fair  to  the  sales- 
man who  has  faith  in  his  original  employer.  It  provides,  by  the 
division  of  the  tremendously  high  traveling  expenses  of  today 
and  of  his  salary,  for  increased  compensation  that  he  can  truly 
earn  in  no  way  to  the  same  extent.  He  is  relieved  of  the  financial 
worries  of  the  older  type  of  combination  export  salesman,  and  he 
is  assisted  in  his  sales  in  a  waj^  that  the  older  type  neither  under- 
stands (except  in  rare  cases)  nor  seemingly  desires. 

Estimating  Effectiveness. — A  carefully  made  estimate  indicates 
that  under  ideal  conditions,  in  the  first  year  of  a  combination 
export  salesman  with  two  lines  he  showed  an  effectiveness  of  90 
per  cent  to  his  original  employer  and  80  per  cent  to  the  second 
exporter — a  total  of  170  per  cent.  Two  years  later,  with  another 
line  added,  he  showed  a  total  effectiveness  of  255  per  cent.  This 
capitalization  of  the  good  salesman  is  sound  economics.  Its 
development  will  mean  much  to  American  export  trade.  Dollar 
for  dollar  invested,  the  new  type  of  combination  export  salesman, 
where  he  can  he  used  wisely,  will  bring  the  greatest  returns. 


CHAPTER  XV 
DEVELOPING   EXPORT  TRADE  BY   CORRESPONDENCE 

"The  business  letter  is  the  most  important  factor  in  the  trans- 
action of  your  business." — A.  W.  Shaw  Co. 

The  Place  of  the  Written  Word  in  Export  Selling.  Corresponfle7ice  E.^tah- 
lishes  the  Reputation  of  an  Enterprise.  Every  Letter  Is  a  Sales  Letter.  The 
Construction  of  an  Export  Sales  Letter.  Mass  Attack  by  Means  of  the  Sales 
Letter.  The  Place  of  the  Enclosure  in  Letter  Series.  Diagnosis  as  the  Pre- 
dominant Factor  in  Export  Sales  Correspondence.  Letters  that  Build  up  Good 
Will. 

The  letter  is  the  universal  method  of  communicating  sales 
ideas.  The  sales  letter  can  convey  its  message  to  every  port  of 
the  seven  seas  and  every  nook  of  the  five  continents.  The 
written  word  is  the  medium  which  makes  possible  true  world 
export  trade,  for  there  are  many  markets  so  difficult  and  expensive 
to  reach  by  the  salesman  that  the  sales  expense  of  personal  repre- 
sentation is  prohibitive.  The  letter  must,  therefore,  be  not  only 
a  method  of  communication  with  business  relations  established 
by  personal  contact,  but  also  itself  a  means  of  bringing  business 
relations  into  being. 

The  personal  representative  who  is  the  strongest  selling  force 
when  in  action  has  limitations  imposed  by  cost  of  selling.  Busi- 
ness, to  be  profitable,  must  be  conducted  at  a  sales  expense  which 
soon  becomes  normal.  For  this  reason  the  export  sales  letter 
often  justifies  abnormal  sales  expense  in  personal  visits  to  make 
possible  opening  of  business  which  can  then  be  conducted  by 
correspondence  alone.  In  every  phase  of  export  selling  the 
letter  will  be  found  as  a  positive  sales  force.  Some  prospective 
customers  may  be  reached  by  advertising  alone,  to  l)e  sure,  but 
once  reached,  it  is  the  letter  that  develops  their  interest  from 
that  of  the  casual  purchaser  to  the  stage  of  the  pleased  customer 
and,  later,  to  co-partner  in  the  marketing  of  the  manufacturer's 
products. 

Why  Letters  Are  Important. — Every  actual  export  customer 
must  be  the  recipient  of  letters.  Even  if  the  policy  of  the  ex- 
porter is  to  refrain  from  more  than  formal  contact,  each  shipment 

147 


148  EXPORT  MERCffANDISINa 

of  his  nKMchaiulisc  inusl  cause  a  Icitcr  of  advice  to  the  customei' 
of  (he  shipment.  The  good  (>xpoi(er  welcomes  every  opportu- 
nity to  write  his  customers,  actual  and  prospective;  for  through 
these  letters  he  is  given  the  chance  to  prove  himself  more  than 
a  machine. 

Nor  is  export  correspondence  confined  to  letters  to  customers 
and  prospective  customers.  The  export  letters  to  the  salesman 
are  a  most  important  factor  in  the  development  of  export  sales. 
Letters  to  sources  of  service  and  information  in  foreign  countries 
are  an  integral  part  of  world  trade  building.  Letters  to  agents 
who  are  in  no  way  customers,  but  rather  resident  selling  repre- 
sentatives, are  a  means  of  profit-building  which  are  superior 
to  any  other  one  form  of  maintaining  the  interest  of  a  most 
important  factor  in  the  export  trade  of  today. 

The  Power  of  Correspondence. — The  place  of  the  written  word 
in  export  selling  is  known  to  be  a  high  place.  Its  limitations 
are  not  yet  known.  The  science  and  the  art  of  using  corre- 
spondence as  a  trade  developer  abroad  are  still  in  their  infancy. 
A  long-experienced  exporter — one  who  is  closely  identified  with 
recent  improvements  in  international  postal  service — recently 
said,  "I  firmly  believe  that  in  the  next  decade  the  Ignited  States 
will  grow  to  the  realization  of  the  tremendous  power  of  the  letter 
as  a  means  of  selling  goods  in  foreign  countries.  I  look  to  the 
early  day  when  this  fact  is  recognized  so  full}'  that  there  will  be 
ten  active  exporters  where  there  is  now  but  one.  The  letter  and 
the  sample,  both  properly  used,  make  possible  the  securing  of 
new  business  abroad  at  a  fraction  of  the  cost  of  securing  new 
business  at  home.  The  markets  of  the  world  await  the  pleasure 
of  the  skilled  writer  of  export  sales  letters." 

It  is  a  fatal  fault  in  exporting  to  assume  that  the  foreign  mer- 
chant appreciates  or  has  reason  to  appreciate  the  domestic 
standing  of  any  manufacturer.  The  reputation  of  the  exporter 
is  built  from  the  letters  which  go  out  on  his  letterheads. 

This  is  clearl}'  proved  by  a  single  example  and  from  the  detluc- 
tions  which  can  easily  be  drawn  from  this  single  example.  An 
American  manufacturer  whose  sales  for  forty  years  had  been  con- 
fined to  the  domestic  market,  wisely  decided  to  seek  sales  outside 
the  United  States.  Equally  wisely  it  selected  from  its  domestic 
sales  force  a  veteran  representative,  a  man  of  exceptional  like- 
ableness  and  personal  magnetism.  This  salesman  made  a  highly 
successful  fii'st  trip.     He  opened  accounts  in  each  market  he 


CORRESPONDENCE  IN  EXPORT  TRADE  J 4!) 

visited  with  the  most  rehable  and  importaiit  inerchaiits.     He 
proved  beyond  doii})t  his  own  abihty  and  honesty. 

On  his  second  trip  his  customers  became  his  friends.  He  was 
entertained  at  their  homes.  He  was  welcomed  at  their  clubs. 
His  counsel  and  advice  was  sought  in  the  general  conduct  of  their 
business.  But  to  the  many  new  customers  the  salesman  was 
the  important  factor.  He  could  have  easily  transferred  90  per 
cent  of  the  business  which  he  had  brought  into  being  to  any 
competitive  product  which  he  might  have  selected.  The  manu- 
facturer had  not  established  its  reputation  as  more  than  an 
enterprise  with  a  worthy  product  and  the  employer  of  one 
exceptionally  able  salesman. 

HOW  CORRESPONDENCE  ESTABLISHES  REPUTATION 

But  by  the  end  of  the  fourth  year  the  house,  through  its  corre- 
spondence, had  established  its  reputation.  As  one  merchant 
told  the  salesman,  "All  of  us  liked  you  so  well  that  we  wished  to 
confine  our  relations  with  your  house  to  contact  with  you  alone. 
We  never  wrote  your  house.  We  held  all  orders  possible  for 
your  visits  and  cabled  for  our  emergency  needs.  But  since,  by 
letter,  we  have  come  to  know  your  president,  your  general  man- 
ager, your  sales  manager,  your  finance  man,  your  advertising 
man  and  your  traffic  man  we  must  believe  that  your  associates 
are  all  of  your  calibre.  You  are  to  be  congratulated  on  identi- 
fying yourself  with  such  an  enterprise." 

The  executives  of  any  enterprise  meet  but  few  of  its  customers, 
and  these  at  infrequent  intervals.  Letters  are,  therefore,  the 
medium  by  which  policies  are  shown  to  its  customers,  and  from 
letters  deductions  are  drawn  as  to  their  fairness.  It  is  particu- 
larly important,  as  the  incident  related  shows,  that,  regardless 
of  the  individual  or  the  department  from  which  correspondence 
originates,  there  be  a  uniformity  of  tone,  a  building  up,  letter  b}' 
letter,  of  goodwill.  Every  letter  should  build  reputation  for  the 
enterprise  as  a  whole  instead  of  for  the  individual  who  signs  the 
letter. 

Pen-and-ink  Signatures. — It  is  particularly  important  in 
export  selling  that  pen-and-ink  signatures  over  titles  be  used. 
These  pen-and-ink  signatures  over  proper  titles  give  to  rather 
than  take  from  the  reputation  of  the  enterprise  as  a  whole.  If 
only  a  cold  typed  signature  of  the  corporate  name  appears  there 


150  EXPORT  MERCHANDISING 

can  be  no  building  of  friendship  for  the  entire  enterprise  by  the 
addition  of  friends,  one  by  one,  whose  names  in  the  personal 
touch  of  pen-and-ink  signatures  come  to  be  familiar. 

It  is  highly  important,  also,  that  the  tone  of  every  letter  to  a 
foreign  customer  truly  represent  the  enterprise.  There  can  be 
crudeness  of  expression  if,  behind  the  crudeness,  there  is  the 
proper  spirit  and  the  proper  appreciation  of  the  customer's  needs 
and  desires.  But  the  curt,  the  impatient,  the  insinuating  note 
in  a  single  letter  from  any  department  will  do  damage  all  but 
impossible  to  repair. 

For  this  reason — the  tremendous  damage  a  single  poorly 
handled  export  letter  can  create — many  firms  have  all  letters  to 
their  foreign  customers  written  in  a  single  department.  This  is 
either  a  mistake  or  a  convincing  admission  of  a  grave  business 
weakness.  It  is  a  mistake — as  shown  by  the  episode  of  the  sales- 
man— to  encourage  customers  to  have  their  allegiance  with  an 
individual  instead  of  with  the  business  as  a  whole.  It  is  a  con- 
fession of  weakness  for  any  executive  to  admit  that  he  has  in 
his  domestic  employ  any  man  whose  work  brings  him  in  personal 
or  semi-personal  contact  with  customers  who  is  unable  to  repre- 
sent the  enterprise  creditably  and  with  whom  there  is  danger  of 
loss  of  business  by  the  tone  of  his  communications. 

Friendship  Building. — The  greatest  asset  that  the  export  letter 
creates  is  the  building  of  business  friends.  The  greater  the  num- 
ber of  friends  within  an  enterprise  which  each  export  customer 
feels  he  possesses,  the  greater  is  the  certainty  of  his  permanent 
regard  for  the  enterprise  as  a  whole. 

Every  Letter  a  Sales  Letter.^ — Surely  every  communication 
with  a  customer  or  one  who  is  desired  as  a  customer  must  be  a 
sales  communication.  Every  letter  must  convey  a  sales  idea. 
Take,  for  example,  an  acknowledgment  of  an  order.  On  its 
face  the  letter  is  purely  routine  in  character.  Yet  the  sales  idea 
to  be  considered  and  included  is  to  make  the  acknowledgment  of 
such  a  character  that  it  will  lead  to  other  orders.  The  securing 
of  further  orders  must  admittedly  be  a  sales  development,  and 
any  letter  that  furthers  the  sales  development  is  a  sales  letter. 
Take  a  collection  letter  as  an  example.  It  is  quickly  to  be  seen 
that  a  collection  letter  is  essentially  a  sales  letter.  It  paves 
the 'way,  through  its  successful  outcome,  to  sales  impossible  with- 
out it. 

The  Basis  of  the  Collection  Letter. — Indeed,  the  collection 


CORRESPONDENCE  IN  EXPORT  TRADE  151 

letter  of  the  best  type  is  a  direct  rather  than  an  indirect  sales 
letter.  One  of  the  best  types  of  collection  letters  causes  pay- 
ment to  be  made  because  the  debtor  is  sold  the  desirability  of 
some  specific  merchandise  which  he  knows  that  he  cannot  obtain 
until  he  has  liquidated  his  outstanding  indebtedness.  The  funda- 
mental sought  in  every  letter,  whether  it  be  in  relation  to  credits, 
collections,  forwarding  or  actual  merchandise,  is  to  sell  the  broad 
idea  that  the  exporting  enterprise  is  one  with  which  relations 
are  desirable. 

This  idea  of  every  letter  as  a  sales  letter  must  be  clearly 
recognized  by  every  correspondent  and  by  every  department. 
With  the  appreciation  of  the  importance  of  this  basic  idea  there 
will  be  an  end  to  routine  letters  in  exporting.  Every  letter  offers 
each  correspondent,  no  matter  how  humble  his  position,  an 
opportunity  to  work  directly  in  the  most  important  of  all  tasks, 
the  bringing  into  being  of  closer  relations  with  customers.  There 
is  no  man  in  any  enterprise  too  high,  and  no  man  too  low  in 
position,  to  be  an  exception  to  this  rule. 

Individual  Thought  in  Each  Letter. — Since  every  letter  must  be 
a  sales  letter,  must  be  a  definite  step  toward  a  definite  goal,  it 
follows  as  a  natural  consequence  that  each  letter  must  be  freed 
from  the  routine  in  expression  as  well  as  the  routine  in  thought. 
Letters  may  be  conventional,  but  never  stereotyped.  The 
customer  is  entitled  not  only  to  the  courtesy  of  acknowledg- 
ments and  advices  but  also  to  individual  thought  and  individual 
treatment.  To  make  every  letter  a  sales  letter  the  correspon- 
dent must  learn  to  make  each  letter  contain  both  his  own 
personality  and  this  carefully  adapted  to  the  individuality  of  its 
recipient. 

There  is  ample  opportunity  to  make  every  letter  a  sales  letter. 
It  is  a  question  of  state  of  mind  on  the  part  of  its  writer.  If 
the  writer  merely  corresponds  from  necessity  or  from  ordinarj^ 
business  courtesy  his  letters  will  reveal  the  fact  by  their  entire 
absence  of  the  selling  thought  and  from  the  absence  of  the  spirit 
of  service  which  must  be  behind  each  selling  thought  to  make  it 
sincere . 

"Remembering  youi-  instructions"  or  "Because  of  your  pre- 
ference" change  the  most  mechanical  of  letters  into  personal 
messages  reminding  the  customer  of  your  standards  of  service 
in  their  direct  application  to  him.  The  "We  have  shipped  per 
S.  S.  Asiatic"  is  inferior  to  "Your  order,  including  sales  helps  in 


1 5  2  K  Xro  /.'  7 '  .1  /  A'  A'  CHAN  DISl  N(! 

which  you  have  shown  sucli  intciost,  has  gone  forward  by  S.  S. 
Asiatic,"  not  only  because  the  first  expression  of  the  idea  is 
stereotyped  but  also  because  the  mental  image  which  the  second 
wording  brings  before  the  buyer  is  personal  and  pleasing. 

The  Adjustment  Letter. — In  adjustments  it  is  possible  to  do 
more  harm  than  good,  even  when  meeting  the  customer's  rights 
and  wishes  completely,  if  the  letter  confirming  the  adjustment 
leaves  room  for  the  inference  that  the  adjustment  is  reluctantly 
granted  and  is  an  imposition.  Letter  after  letter  to  export 
customers  on  a  matter  of  adjustment  has  offended  customers 
when  the  opportunity  for  a  sales  letter  in  the  fullest  meaning  of 
the  term  was  offered — offered  at  a  cost  which  demanded  the  right 
letter  which  would  cement  instead  of  destroy  the  business  relation 
so  hard  to  win  and  so  easy  to  lose.  There  should  be  a  heavy 
penalty  for  any  one  who  makes  an  adjustment  an  insult  to  the 
foreign  merchant.  There  is  a  heavy  penalty  to  the  enterprise  he 
represents. 

Almost  the  first  question  of  the  export  beginner  is,  "Must  we 
write  to  foreign  merchants  in  their  own  language?"  The 
export  beginner  should  ask  that  question  and  it  should  be 
promptly  and  unequivocally  answered  in  the  affirmative.  The 
exceptions  will  care  for  themselves,  once  the  novice  knows  the  rule. 

Why  Letters  Are  Translated. — It  is  not  catering  to  a  whim  nor 
is  it  merely  a  compliment  to  write  to  the  Brazilian  merchant  in 
Portuguese;  to  the  Argentinian  in  Spanish;  to  the  Swedish 
merchant  in  Swedish.  There  is  an  easily  recognizable  business 
principle  involved.  It  is  never  wise  to  place  an  artificial 
obstacle  between  seller  and  buyer.  The  use  of  any  language  with 
which  the  buj^er  is  not  thoroughly  familiar  is  an  artificial  obstacle 
which  the  seller  should  never  permit. 

This  principle  explains  not  only  the  rule,  but  also  its  exceptions. 
For  the  importing  merchants  in  China  and  Japan,  with  few  cases 
to  the  contrary,  are  in  a  position  to  receive  business  communica- 
tions in  English,  and  hence  the  artificial  obstacle  does  not  exist. 
On  the  other  hand,  since  1600  the  Brazilian  merchant  has  had  a 
distinct  dislike  for  Spanish  as  a  language  and  a  distinct  pride  in 
Portuguese  as  a  language.  While  he  may  (and  usually  does) 
understand  Spanish  perfectly,  he  resents  its  use  in  correspond- 
ence. This  fact  makes  the  use  of  Spanish  in  correspondence  with 
Brazil  an  artificial  obstacle  because  of  the  nature  of  its  reception 
by  the  Brazilian  merchant. 


CORRESPONDENCE  IN  EXPORT  TRADE  153 

Fundamentals  of  Construction. — In  tlio  construction  of  an 
export  sales  letter  it  is  well  to  I'enieniher  that,  befoi-e  a  sale  is 
attempted  the  prospectiv(>  buyer's  mind  should  he  freed  from  any 
doubts  as  to  the  ability  and  stability  of  the  exporter.  It  must 
be  emphasized  that  the  foreign  merchant  is  seldom  aware  of  the 
importance  of  more  than  a  score  of  American  manufacturers. 
He  is  aware  of  their  importance  because  their  fame  is  inter- 
national rather  than  national,  and  becau.se  by  intelligent 
expenditure  they  have  made  their  names  known  internationally. 

Until  the  foreign  merchant  is  convinced  that  the  source  of 
supply  is  desirable  it  is  not  sense  to  assume  that  he  wmII  favorably 
consider  a  specific  product  on  its  merits.  Too  many  American 
manufacturers  starting  in  to  export  blind  themselves  to  this  fact 
and  draw  entirely  wrong  deductions  when  their  particular 
worthy  articles  are  not  readily  accepted  by  those  to  whom  they 
are  offered.  The  foreign  merchant  is  so  far  from  his  sources  of 
supply  that  he  needs  must  be  certain  that  the  enterprise  behind 
the  product  is  as  worthy  as  the  product  itself  is  desirable.  If 
the  American  manufacturer  will  but  place  himself  squarely  in 
the  position  of  the  importing  merchant  he  will  see  both  the  wis- 
dom and  the  need  for  this  attitude. 

The  Bond  of  Common  Interest. — In  each  export  sales  letter 
there  should  be  a  common  point  of  interest,  and  no  forward  step 
should  be  taken  until  the  common  point  of  interest  has  been 
located.  Once  there  is  this  bond,  the  development  of  the  sales 
message  is  possible  along  lines  which  can  lead  to  the  desired  result. 
For  example,  the  foreign  merchant  is  interested  in  his  own 
profit.  This  is  a  common  point  of  interest,  because  unless  the 
foreign  merchant  will  profit  by  his  purchases  then  surely  no 
exporter  can  reasonably  expect  him  to  purchase.  The  foreign 
merchant  is  interested  in  the  acquisition  of  new  sources  of  supply 
only  when  they  will  serve  him  better  than  existing  sources  of 
supply.  Once  the  American  exporter  can  convince  the  foreign 
merchant  that  this  desire  is  one  which  he  can  meet,  the  logical 
step  is  the  opening  of  business  relations. 

The  construction  of  the  export  sales  letter  thus  condenses  itself 
into  a  series  of  rules  which  appeal  by  their  simplicity  and  reason- 
ableness to  any  student  or  practitioner  of  l)usiness.  The  mere 
fact  that  the  foreign  merchant  wishes  first  to  be  sure  of  the 
stability  of  his  sources  of  supply  argues  that  the  same  foreign 
merchant  is  a  desirable  customer  who  will  not  shift,  when  once 


154  EXPORT  MERCHANDISING 

secured,  except  for  good  reasons.  It  argues  that  he  will  remain 
solvent  j)ecausc  of  the  care  he  exerciises  in  his  business  relations. 
It  argues  that  he  will  l)e  open  to  conviction  of  merit  because  he 
buys  on  a  sound  basis  rather  than  from  caprice. 

The  export  sales  letter  can,  therefore,  be  built  on  lines  wherein 
the  export  will  win  and  the  novice  will  lose — which  is  a  solid 
foundation,  for  it  means  that  pains  will  be  repaid  and  that  the 
customer  honestly  won  will  not  be  lost  to  the  haphazard  exporter 
who  ignores  and  scorns  fundamentals. 

THE  MASS  ATTACK 

One  of  the  most  important  means  of  developing  foreign  sales 
is  the  intelligent  use  of  the  form  sales  letter.  Because  exporting 
is  not  exploration  or  discovery  there  are  many  ways  in  which 
lists  of  prospective  customers  can  be  obtained.  It  is  perfectly 
possible  to  build  up  quickly  and  at  comparatively  small  expense 
a  mailing  list  running  into  thousands  of  selected  names  of  foreign 
merchants  known  to  be  interested  in  the  sale  of  articles  of  the 
same  general  nature  as  those  of  all  except  the  unusual  manufac- 
turer. The  maker  of  stationery,  shoes,  labor-saving  devices, 
cooking  utensils,  tooth  pastes — of  the  thousands  of  typical 
American  products— can  have  in  a  few  weeks  from  the  time  he 
decides  to  seek  export  profits  lists  so  prepared  as  to  eliminate  the 
unworthy  and  to  include  the  desirable. 

Lists  Are  Targets. — These  lists  are  worthless  in  themselves. 
They  merely  supply  targets  toward  which  selling  messages  can  be 
aimed.  Because  it  is  seldom  possible  to  cover  quickly  and 
adequately  more  than  a  small  fraction  of  desirable  customers  by 
the  visits  of  personal  representatives,  these  lists  are  of  double 
importance.  First  of  all,  they  furnish  a  means  to  sell  merchants 
located  in  cities  which  travelers  seldom  visit  and,  second,  they 
offer  a  means  to  prepare  merchants'  minds  for  the  later  arrival 
of  travelers. 

The  strength  of  these  lists  and  of  the  sales  methods  used  to 
capitalize  them  lie  in  three  distinct  divisions.  The  possibility 
of  reaching  simultaneously  thousands  of  known  buyers  is  a 
tremendous  asset.  The  low  cost  of  letters  in  comparison  with 
other  selling  methods  furnishes  a  second  advantage.  The 
economy  of  using  the  same  sales  appeal  in  every  corner  of  the 
world  leaves  the  export  executive  free  to  develop  many  other 


CORRESPONDENCE  IN  EXPORT  TRADE  155 

sales  ideas  where  by  individual  appeal  his  time  would  be  so 
fully  used  that  development  would  be  all  but  impossible. 

Inherent  Weaknesses. — The  weakness  of  sales  appeal  based  on 
such  lists  is  the  impossibility  of  making  each  letter  an  individual 
letter  which  would  appeal  to  the  individual  instead  of  to  the 
general  type  of  individual  his  presence  on  the  list  proclaims  him 
to  be.  This  is  a  decided  disadvantage.  A  second  and  also  a 
serious  disadvantage  lies  in  the  uncertainty  as  to  the  thorough 
desirability  as  customers  of  a  merchant  on  such  lists.  No  matter 
how  carefully  such  lists  may  be  prepared  they  inevitably  include 
many  who,  while  financially  stable,  have  undesirable  character- 
istics which  may  later  in  their  selling  methods  in  a  market 
antagonize  far  more  desirable  importers  to  the  extent  of  a  prac- 
tical boycott  of  the  American  manufacturer's  products. 

But  it  is  not  to  be  expected  that  any  sales-bringing  possibility 
can  be  without  some  disadvantages.  The  use  of  well-prepared 
lists  and  carefully  written  letters  has  proved  its  worth  in  so 
many  cases,  and  properly  used  has  so  negligible  a  percentage  of 
loss,  that  it  must  be  recognized  as  an  exceptionally  valuable 
means  to  the  rapid  development  of  export  sales.  To  cite  an 
instance  which  is  of  a  type  by  no  means  rare,  a  Philadelphia 
maker  has,  in  the  past  ten  years,  without  the  outlay  of  an  addi- 
tional dollar  in  sales  expense,  monopohzed  the  sale  through  a 
local  dealer  of  the  entire  governmental  purchases  in  his  lines. 

This  dealer  was  interested  in  purchasing  by  a  form  letter — one 
of  a  series  sent  to  3,000  names.  The  profits  from  the  one  dealer's 
sales  to  his  government,  entirely  apart  from  the  dealer's  pur- 
chases for  commercial  re-sale,  amounted  to  nearly  six  hundred 
thousand  dollars. 

Established  Principles. — The  right  use  of  lists  and  the  right 
use  of  the  series  form  letter  in  export  selling  form  topics  over 
which  exports  in  wordcraft  and  in  export  merchandising  delight 
to  quibble  and  quarrel.  But  there  can  be  no  question  of  the 
basic  principles  involved.  It  pays  to  buy  selected  lists  which 
will  eliminate  the  unworthy  and  a  high  percentage  of  those 
otherwise  undesirable.  It  pays  to  plan  letter  series  to  conform 
with  the  acknowledged  fundamentals  of  merchandising.  Each 
letter  in  a  series  has  its  definite,  distinct  part  in  the  sales  effort. 

First  of  all,  the  series  of  form  letters  must  be  logical  in  its 
arrangement.  It  must  first  convince  the  foreign  merchant  that 
the  exporter  is  a  desirable  source  of  supply.     The  second  duty 


15()  KM'Oirr  MKIiCllANDlSINC, 

of  the  .^ories  of  letters  is  to  coiiviiice  the  foreign  merchant  that. 
the  product  is  of  a  (jiiahty  which  will  serve  his  customers  and 
reflect  credit  on  his  ability  as  a  purchaser.  The  third  duty  of  the 
series  of  letters  is  to  prove  to  the  foreign  merchant  that  he  will 
profit  from  his  purchase.  The  final  duty  of  the  series  of  letters 
is  to  cause  the  prospective  customer  to  become  an  actual 
customer. 

The  Use  by  Veterans. — ^Even  the  experienced  exporter  can  and 
does  use  the  series  form  sales  letter  constantly.  In  markets  to 
which  he  cannot  afford  to  send  his  own  salesman  he  can  afford  to 
send  his  own  letters.  He  therefore  balances  his  personally 
developed  sales  areas  by  the  added  volume  of  scattered  sales  in 
territories  where  sales  expense  prohibits  the  use  of  any  other 
direct  sales  method.  Market  after  market,  small  and  distant, 
is  combed  fine  by  the  series  sales  letter  and  in  these  the  mass 
foundation  is  laid  for  individual  appeal  which  becomes  possible 
when  his  letters  are  answered. 

THE  PLACE  OF  THE  ENCLOSURE  IN  A  LETTER  SERIES 

The  correct  use  of  the  enclosure  in  export  sales  letter  series  is 
rare.  Even  among  the  veteran  exporters  whose  export  corre- 
spondence is  beyond  reproach  the  weakness  of  utter  failure  to 
combine  in  a  letter  series  the  full  possibilities  of  the  written  and 
the  printed  word  is  costly  and  amazing.  This  is  an  inter- 
national fault.  In  fact,  the  few  examples  of  the  correct  use  in 
export  selling  of  the  enclosure  can,  fortunately,  be  credited  to 
American  exporters. 

It  is  a  correct  generalization  to  state  that  long  letters,  provided 
they  are  necessarily  long,  will  be  read  by  foreign  merchants. 
But  it  is  not  the  truth  that  it  is  wise  to  handicap  the  attempt  to 
open  business  relations  with  the  foreign  merchant  by  letters  of 
four  and  five  pages,  even  when  the  subject  matter  is  of  interest. 
The  principle  of  never  placing  an  artificial  obstacle  between  buyer 
and  seller  applies  in  the  case  of  overlong  letters  as  in  the  use  of  an 
unfamiliar  language. 

Dividing  the  Task. — There  is  a  happy  medium  between  the  use 
of  five  page  letters  and  the  omission  of  worthwhile  selling  points. 
This  happy  medium  is  the  use  of  enclosures  with  letters.  There 
is  a  world  of  difference  between  the  enclosing  of  even  an  interest- 
ing circular  and  the  use  of  an  enclosure  designed  to  accomplish 


CORRESPONDENCE  IN  EXPORT  TRADE  JTu 

a  definite  task  and  to  be  as  much  a  part  of  the  selhng  attack  as 
any  paragraph  in  the  letter  itself.  Enclosures  are  placed  in  with 
letters  on  the  assumption  that  they  will  be  road.  If  this  is  sound 
reasoning  there  is  no  reason  why  they  should  not  be  read  in  the 
same  spirit  as  the  letters  themselves. 

The  first  step  in  the  building  of  a  letter  series  is  to  determine 
what  the  key-note  of  each  letter  must  be.  These,  as  shown  in 
the  specimens  given  later,  can  advantageously  be — 

1.  Introduction  of  maker  to  buyer 

2.  Quality  of  product 

.3.   Profit  on  re-sale  by  buyer 
4.  Direct  sales  appeal. 

The  second  step  is  to  list  all  of  the  selling  points  which  apply 
to  each  "key-note."  When  this  carefully  thought  out  list  is 
complete  it  should  be  divided  into  selling  points  which  can  best 
be  used  in  the  letter  and  selling  points  which  will  prove  most 
effective  in  the  accompanying  enclosure.  The  division  into  these 
two  groups  is  worthy  of  great  care.  Certain  types  of  selling 
arguments  can  be  at  their  best  only  with  the  aid  of  typographical 
display.  This  is  notably  true  of  tabulations  and  naturally  of 
portrayal  of  products. 

Proving  Profit  to  Dealer. — For  example,  one  maker  in  his 
letter  "Profit  on  re-sale  by  dealer"  emphasized  the  annual  use  bj^ 
consumer  of  his  device — and  then  proved  in  his  enclosure  ])y  a 
tabulation  that  his  statement  was  correct.  Had  he  filled  his 
letter  with  figures  it  would  have  marred  its  appearance  and 
lost  much  in  smoothness  in  reading.  By  making  his  statement 
in  his  letter  and  referring  to  the  enclosure  for  the  proof  of  his 
startling  statement  he  gained  both  in  holding  the  reader's  interest 
and  in  the  display  in  type  of  the  figures  that  would  have  been 
discouraging  to  the  eye  of  the  reader  if  in  the  body  of  the  letter. 

The  enclosure  must  not  be  permitted  merely  to  contain  the 
odds  and  ends  of  selling  arguments.  It  must  in  itself  be  a 
strong  sales  appeal.  It  is  entirely  wise  for  the  enclosure  to  be 
entrusted  with  even  the  strongest  selling  points,  for  tin*  left  cl- 
ean refer  specifically  to  the  enclosure  and  by  appeal  to  the 
reader's  curiosity  and  self-interest  secures  an  equally  careful 
reading  with  the  letter.  The  use  of  the  enclosure  which  com- 
plements rather  than  supplements  the  letter  makes  possible  the 
use  of  testimonials  which  would  be  unwise  on  the  letter.  Fac- 
simile orders.  X-ray  photographs  of  sections  of  machines  can 


158  EXPORT  MERCHANDISING 

be  specifically  referred  to  in  the  letter  and  prove  claims  that 
would  otherwise  be  only  assertions. 

Keeping  the  Letter  to  Two  Pages. — It  is  usual  that  a  two-page 
letter  with  a  four-page  enclosure  will  cover  all  the  selling  appeal  that 
a  six-page  letter  could  contain,  the  four  pages  saved  by  use  of  the 
(Miclosure  are  thus  well  saved.  Entirely  apart  from  the  relief 
through  variety,  entirely  apart  from  the  greater  possibilities 
open  by  use  of  type  display  and  use  of  color  in  the  enclosure, 
there  are  undeniably  certain  arguments  that  are  more  convincing 
in  type  than  in  the  body  of  the  letter. 

The  greatest  handicap  of  the  written  word  in  selling  is  the 
relatively  little  emphasis  that  can  be  placed  on  the  points  which 
require  the  most  emphasis.  The  underscore,  indentation,  the  use 
of  the  bi-color  ribbon,  the  use  of  capitalization  all  but  exhaust  the 
quiver.  But  in  the  printed  word  we  have  almost  boundless 
scope  for  emphasis — subtle  emphasis  which  enables  an  argument 
to  be  sensed  almost  before  it  is  read.  The  cartoon  is  effective 
with  only  a  caption.  So  certain  illustrations  convince  at  a 
glance. 

The  enclosure  also  gives  the  opportunity  to  place  sales  empha- 
sis by  repetition  which  would  be  offensive  if  made  in  the  letter. 
This  not  only  gains  a  cumulative  value  impossible  or  unwise  in  a 
letter  not  accompanied  by  an  enclosure,  but  it  is  insurance  that 
the  reader  will  receive  the  sales  message.  It  doubles,  at  least, 
the  chance  that  the  points  of  vital  importance  will  gain  the  atten- 
tion of  the  foreign  merchant. 

The  place  of  the  enclosure  in  the  export  letter  series  is  an 
important  one.  Because  its  true  value  has  been  so  little 
appreciated  it  is  doubly  worthy  of  deep  study  and  correct  use. 
Many  of  the  export  form  letter  series  campaigns  that  have  been 
only  half  successful  might  well  have  paid  substantial  dividends 
had  an  enclosure  been  used,  and  used  to  emphasize  the  message 
to  the  foreign  merchant. 

DIAGNOSIS  AS  THE  PREDOMINANT  FACTOR  IN  EXPORT  SALES 
CORRESPONDENCE 

One  of  the  greatest  advantages  of  the  use  of  the  personal 
salesman  over  any  other  selling  method  lies  in  the  fact  that  the 
salesman  can  diagnose  the  case  with  which  he  is  faced  far  more 
easily  than  can  be  done  at  a  distance.  But  the  task  is  the  same. 
The  task  of  the  distant  diagnostician  is  by  no  means  impossible. 


CORRESPONDENCE  IN  EXPORT  TRADE  159 

Securing  Basis  for  Diagnosis. — Indeed  the  advantage  which 
the  salesman  enjoys  in  opportunity  for  diagnosis  after  personal 
observation  is  more  fancied  than  real  in  comparison  with  the 
possibilities  of  the  writer  of  sales  letters.  Diagnosis  for  the 
export  sales  letter  writer  is  difficult  but  by  no  means  impossible. 
Even  before  a  letter  is  written  it  is  possible  to  secure  accurate 
information  which  will  enable  the  first  letter  to  be  based  on  facts 
of  a  decidedly  personal  nature.  These  facts  can  be  secured  in 
many  ways  and  can  be  of  many  kinds  and  varieties. 

But  the  usual  opportunity  for  diagnosis  comes  with  the  inciuiry 
for  prices  or  the  reply  to  the  first  sales  letter  written  without  any 
special  diagnosis.  With  such  a  tangible  and  individual  set  of 
facts  as  must  be  presented  by  even  the  plainest  of  letterheads  and 
the  most  formal  of  letters  the  work  of  the  sales-seeking  diagnos- 
tician is  amazingly  simplified.  It  does  not  require  the  gift  of 
Sherlock  Holmes  to  unearth  from  such  an  inquiry  many  facts 
which  will  make  possible  an  accurate  and  personal  reply  based 
on  the  all  but  certain  preferences  and  tastes  of  the  inquirer. 

Diagnosing  from  a  Letter  Head. — The  example  of  an  export 
sales  letter  based  on  sound  diagnosis  which  follows  is  given  here 
through  courtes)--  of  System.  It  illustrates  vividly  the  possible 
difference  between  the  best  of  form  letters  and  the  individual 
touch  of  the  artist  who  capitalizes  even  the  smallest  of  hints 
as  to  the  best  road  to  the  acceptance  of  the  buyer  of  the  sales 
ideas  of  the  seller.  The  history  of  this  particular  letter  is 
interesting.  An  export  manager  handed  to  a  brother  export 
manager  a  letter  from  an  importer  in  Brazil.  The  letterhead 
showed  that  the  lines  handled  were  French  perfumes,  English 
teas,  Spanish  raisins  and  Italian  olive  oil.     The  exporter  wrote— 

Your  letterhead  is  a  challenge  to  me.  Ever  since  our  common  friend, 
R.  E.  Parker,  of  Parker  &  Sons,  told  me  that  if  I  had  the  right  line  and 
found  you  a  selling  connection  I  could  depend  on  a  steady  market  through 
your  critical  customers,  I  have  been  selecting  and  reselecting  from  the 
forty-odd  lines  I  control,  seeking  the  one  with  the  appeal. 

It  is  a  real  challenge,  for  you  are  handling  the  cream  of  the  world's  best 
lines.  Your  buying  shows  your  familiarity  with  the  leaders  of  every 
country. 

In  sending  you  the  samples  of  Meteor  lockets,  I  am  trying  to  match  my 
twenty  years'  search  for  a  line  of  solid  gold  jewelry  which  would  admit  no 
equal.  Like  you,  I  have  trodden  the  paths  that  pass  the  most  famous 
jewelry  houses  in  London,  Paris,  Buenos,  New  York — wherever  the  height 
of  the  art  would  be  on  display.  Then  I  have  traced  the  best  back  to  the 
factories,  talked  with  the  presidents  and  engravers;  weighed,  compared  and 


160  EXPORT  MERCHANDISING 

rejected.  That  is  why  I  am  selecting  Meteor  lockets  to  send  you.  By  them 
you  can  weigh  me,  for  they  are  my  judgment.  If  your  decision  is  against 
them,  I  have  no  other  line  to  offer  until  I  meet  you  in  person  and  learn 
your  secrets  of  selection. 

I'm  asking  Mr.  Parker  to  write  you  a  letter  of  introduction  for  me  and 
asking  a  few  firms  in  Rio  and  Bahia  to  tell  you  whether  or  not  they  have 
found  my  lines  and  service  profitable. 

That  brings  up  one  further  topic — prices.  They  are,  as  you  will  recognize, 
the  right  prices  for  the  line.  If  my  judgment  is  wrong  on  this,  no  argument 
would  stand  against  your  experience. 

Just  a  little  favor  which  will  be  appreciated.  Do  you  chance  to  know 
whether  the  olive  oils  of  P.  Clerici  et  Cie.  are  exclusively  handled  in  this 
country?  While  the  name  is  a  familiar  one  with  me,  I  cannot  remember 
their  city,  and  so  enclose  a  stamped  envelope  with  the  extra  reis  to  cover 
any  circular  of  theirs  you  may  be  able  to  spare  me. 

With  the  compliments  of  the  season,  I  am. 

Sincerely, 

This  letter  will  appeal  to  every  business  man  who  enjo3^s  the 
selling  instinct  by  the  clean-cut  way  in  which  its  writer  created 
a  common  point  of  interest,  brought  the  issue  at  once  to  a 
personal  issue  and  gained  in  the  very  first  sentence  an  exclusively 
personal  background  for  the  entire  letter.  It  illustrates  one  way 
to  get  away  from  the  cut-and-dried  sales  talks  which  are  still  too 
common  both  in  export  and  domestic  mails. 

Diagnosis  is  the  predominant  factor  behind  good  export  sales 
letters.  It  is  the  equalizer  of  values  in  sales  weapons.  It  is  the 
destroyer  of  the  disadvantages  of  distance. 

In  reading  the  excellent  sales  letter  which  follows,  it  is  well  to 
note  the  respect  for  the  customer's  point  of  view  which  is  religi- 
ously observed.  The  unobtrusive  use  of  idioms,  figures  of 
speech,  peculiarities  of  spelling,  appeals  to  the  reader's  pride  and 
taste.  The  care  makes  certain  that  the  reader  will  know  that 
this  is  an  individual  letter,  written  especially  to  him  and  solely  for 
his  perusal.  It  reveals  carefulness  and  precision.  It  contains 
the  essence  of  true  courtesy. 

24th  January,  1915. 
Messrs.  Milliard  Bros.  &  Co.,  Ltd., 
716  Collins  Street, 
Melbourne,  Vic. 

Dear  Sirs: 

I  would  appreciate  the  favour  of  your  examination  of  the  samples  of 
Meteor  lockets,  which  are  going  on,  duty  paid,  by  this  post. 

If  you  will  shew  these  to  some  of  your  customers  who  enjoy  good  crafts- 
manship, I  would  be  doubly  grateful  for  their  comments. 


.  ■  / 


I  i.'i 


.1 


>r| 


N 


CORRESPONDENCE  IN   KXPORT   TRADE  Kil 

It  has  not  been  my  )i;()()(l  fortiiiio  to  visit  Melbourne  since  1908,  antl  in 
my  five  trips  1  never  ehaneed  to  represent  any  jewelry  lines.  This  I  certainly 
regret  now,  for  with  your  many  years  of  experience  in  Melbourne  in  the 
jewelry  line,  a  personal  acciuaintaTice  would  make  me  feel  1ha(  I  was  no( 
imposing;  on  your  j^ood  nature  in  my  queries. 

It  would  naturally  be  a  pleasure  to  me  to  find  that  the  lockets  will  appeal 
to  you  as  something  worth  selling,  and  the  attached  sheet  will  give  prices, 
terms  and  all  shipping  details,  arranged  to  shew  you  the  per  cent  laid  down 
on  several  other  lines  as  well. 

Are  you  by  any  chance  allied  with  Messrs.  Hilliard  &  Pons,  Ltd.,  of 
Glasgow?  If  so,  possibly  advantageous  shipping  arrangements  could 
be  made  through  my  Glasgow  connections. 

Yours  faithfully, 

JAMES  M.  JOxNES. 
Copied. 

Ten  points  of  distinction  characterize  this  letter  and  helped 
instil  the  subconscious  feehng  in  Messrs.  Hilliard  &  Co.,  Ltd., 
that  they  could  depend  on  James  M.  Jones:  (1)  24th  January, 
1915;  (2)  Messrs.  (too  often  omitted);  (3)  favour;  (4)  by  this 
post;  (5)  shew;  (6)  shew  the  per  cent  laid  down;  (7)  Glasgow, 
(not  Glasgow,  Scotland);  (8)  Yours  faithfully;  (9)  Copied;  and 
(10)  the  follow  copy  which  went  to  Messrs.  Hilliard  &  Co.,  Ltd., 
on  the  next  boat. 

It  would  be  mere  snobbery  to  use  any  of  these  points  of  distinc- 
tion conspicuously.  The  important  fact  here  is  that  they  were 
used  without  ostentation  and  that  they  were  substituted  for 
words  which  by  their  awkwardness  to  the  foreign  reader  would 
distract  his  attention  from  the  straight  consecutive  reading  of 
the  message. 

LETTERS  THAT  BUILD  UP  GOODWILL 

The  good  exporter  seeks  every  opportunity  to  write  to  his 
customers.  He  purj:)osely  does  not  use  printed  forms  of  acknowl- 
edgment of  orders  and  remittances  because  the  occasions  on 
which  these  printed  forms  could  be  used  are  golden  chances  to  aid 
in  the  bringing  of  more  intimate  relations.  But  the  good  exporter 
is  often  without  valid  excuse  for  writing.  He  realizes  that  if  all 
his  letters  are  sales  letters  in  the  usual  sense  of  the  word  that  he 
may  rightly  be  censured  for  the  bad  fault  of  over-solicitation  of 
orders. 

There  is,  too,  an  important  part  of  exporting  which  consists  in 
the  creating  of  friendship  for  its  own  enjoyment.  This  friend- 
11 


162  EXPORT  MERCHANDISING 

ship  is  the  breath  of  life  to  true  exporting  which  is  not  merely 
the  amassing  of  dollars  but  the  gaining  of  friends.  The  man  who 
attempts  to  divorce  his  social  and  his  business  enjoyments  usually 
ends  by  losing  a  part  of  his  enjoyment  of  life. 

The  "  Intermediate  Letters. " — ^For  this  reason  the  good 
exporter  who  enjoys  both  his  earned  profits  and  his  friendship, 
both  gained  in  his  ventures  into  foreign  fields,  learns  to  regard  his 
customers  as  partners  and  learns  to  direct  his  correspondence 
along  lines  of  friendship.  This  brings  into  being  a  type  of 
correspondence  which  can  be  called  "intermediate  letters,"  in 
that  they  do  not  refer  to  any  definite  transactions,  nor  are  they 
purely  social  in  their  nature.  It  is  a  poor  friend  who  does  not 
wire  or  write  when  the  cable  tells  of  a  national  disaster  such  as  an 
earthquake,  tidal  wave  or  volcanic  disturbance.  It  is  a  poor 
friend  that  has  not  a  word  of  sympathy  and  condolence  for  the 
loss  of  a  partner  or  member  of  the  family.  Just  as  a  friend 
engaged  in  mercantile  pursuits  welcomes  the  "inside"  story 
behind  a  new  product,  welcomes  the  portrayal  of  exceptional 
stories  of  salesmanship,  so  the  foreign  merchant  welcomes  letters 
which  tell  him  of  just  these  cross-sections  of  business  life. 

The  plans  for  a  campaign  in  India  and  the  history  of  its  progress 
are  interesting  to  the  merchant  in  Iceland.  Photographs  show- 
ing unusual  methods  of  transportation  of  a  maker's  products 
appeal  to  the  merchant  who  is  selling  these  products  under  a 
different  sun.  Advance  information  of  I'eorganization,  souvenirs 
of  house-warmings  and  company  outings  and  entertainments 
all  bring  maker  and  merchant  closer  together  and  better  able  to 
coordinate  their  efforts. 

The  New  Year's  Greeting. — The  New  Year's  Greeting  is 
really  a  letter — a  printed  letter  of  appreciation  and  good  wishes. 
It  is  a  little  thoughtful  touch.  It  is  far  more  deeply  appreciated 
abroad  than  is  generally  known.  It  is  typical  of  the  exact 
spirit  which  should  be  the  very  foundation  of  all  export  corre- 
spondence when  it  says,   " — wishes  you  every  happiness 

and  prosperity ,  and  takes  advantage  of  this  opportunity 

to  convey  to  you  the  sincere  appreciation  of  favors  shown  in  the 
past." 

For  behind  every  export  letter  should  be  the  desire  for  friend- 
ship and  a  recognition  of  friendship.  Profits  will  follow  because 
profits  are  the  dividends  of  honest  and  able  friendships. 


CHAPTER  XVI 
HOW  ADVERTISING  GETS  FOREIGN  TRADE 

"Advertising  is  as  necessary  to  the  successful  conduct  of  export 
trade  as  it  is  in  the  domestic  field." — Philip  B.  Kennedy. 

/Superiority  of  American  Advertising  Methoih  in  Domestic  Field.  Need 
of  Greater  Interest,  by  Americans,  in  Export  Advertising.  Examples  of 
Poor  Advertising  and  Ununse  Delegation  of  Advertising  Authority.  Twenty-two 
Ways  to  Use  Export  Advertising.  Need  of  Definite  Advertising  Plan  Behind 
Every  Dollar  Invested.  Costly  Errors  of  American  Export  Advertisers. 
Advertising  Used  to  Secure  Orders  through  Export  Cotnmission  Houses.  How 
an  Export  Salesman  Secured  Needed  Appropriations  for  Local  Advertising. 
Publicity  Method  Used  by  European  Maker.  Export  Advertising  not  a 
Matter  of  Freakishness.  Fradulent  Advertising  Schemes.  Common  Mistakes 
in  Export  Advertising. 

It  is  universally  conceded  that  there  is  no  better  advertiser 
in  the  world  than  the  American — when  the  test  is  made  on  the 
basis  of  domestic  effort.  The  Austrian,  the  Brazilian,  the  South 
African  are  often  subscribers  to  popular  and  trade  magazines 
published  in  this  country,  and  in  many  cases  subscribers  in 
truth  to  the  advertising  sections  only. 

If  the  average  American  manufacturer  is  not  branded  a  tyro 
in  international  advertising  endeavor  it  is  because  he  is  not 
called  upon  to  meet  a  standard  as  high  as  that  set  here  by 
domestic  competition  or  because  of  the  courtesy  of  the  better 
business  men  in  foreign  countries. 

Domestic  High  Standards  Lowered, — Too  many  firms  take 
the  deficit-producing  attitude  that  "anything  is  good  enough 
for  export" — and  reap  exactly  the  harvest  which  might  be 
expected.  Not  long  ago,  the  export  manager  of  a  leading 
American  textile  concern  felt  insulted  when  he  heard  his  export 
advertising  described  as  inferior.  The  proof  was  so  complete, 
however,  that  he  reformed  his  firm's  attitude;  for  where  in  this 
country  they  were  using  most  elaborate  designs  of  really  artistic 
merit  in  a  dozen  trade  papers,  in  the  foreign  field  their  advertise- 
ments were  pure  type  set-ups  and  poorly  selected. 

It  did  not  cost  this  firm  a  dollar  more  to  transfer  their  foreign 
advertisements  to  the  more  attractive  layout.     The  plates  were 

163 


1()4  EXPORT  MERCIl.WDISISa 

worthless  aft(M-  use  in  iloincstic  incdiuins,  except  for  export 
advertising,  and  only  criminal  in(Mtia  had  prevented  their  profit- 
able employment   in  makinji;  foreign  dividends. 

Value  of  Cooperation. — Many  export  managers  have  still  to 
make  the  ])usiness  acquaintance  of  the  advertising  managers 
of  their  own  enterprises.  Because  "export  is  export,"  some 
export  managers  (unworthy  of  the  title)  insist  that  they  alone  can 
know  what  kind  of  copy  and  display  will  bring  results  outside  the 
United  States.  Sometimes  perverted  fortune  smiles  on  their 
ilk  which  enables  them  to  point  out  phrases  which  would  be 
actually  offensive  to  the  Latin- American  dealer,  in  the  otherwise 
carefully-prepared  suggestions  of  excellent  advertising  managers. 
But  if  to  the  advertising  man's  craft  had  been  added  the  intimate 
market  knowledge  of  the  export  end,  obviously  more  compelling 
series  of  advertisements  would  have  resulted. 

A  few  export  advertising  atrocities  are  presented,  in  the 
hope  that  their  display  may  prevent  further  costly  failures 
of  similar  nature.  A  successful  Pennsylvania  manufacturer 
of  knitted  goods  was  interested  in  the  foreign  field  by  the  intelli- 
gent persistence  of  three  export  trade  publications  published  in 
this  country.  The  conversion  was  complete — so  much  so  that 
the  manufacturer  rushed  a  special  double-page  layout  in  order  to 
secure  immediate  insertion.  In  addition  to  several  most  ques- 
tionable sales  arguments  (questionable  in  the  light  of  the  markets 
the  mediums  reached)  one  single  error  made  clear  to  every  reader 
that  they  would,  in  ordering,  be  at  the  mercy  of  an  export  novice, 
for  bold  and  brazen  were  the  terms,  "2  per  cent  10  days  date  of 
invoice" — something  that  not  1  per  cent  of  the  readers  could 
have  accepted.  The  average  export  invoice  would  be  hardly 
out  in  mid-ocean  in  10  days'  time! 

Coordinated  Effort  the  Key. — Were  it  not  for  the  assurance  of 
those  high  up  in  export  advertising  circles,  it  would  seem  incredible 
that  any  alert  American  firm  would  permit  either  the  export  or 
advertising  department  to  have  sole  sway  over  the  actual  presen- 
tation of  sales  arguments  by  the  printed-word  route  to  foreign 
dividends,  unless  the  same  executive  controlled  both,  and  felt 
assured  of  the  entire  competency  of  one  of  the  two.  It  is  not 
in  the  least  uncommon,  however,  in  industries  in  which  domestic 
business  is  carried  on  along  highly  practical  lines,  to  allow  the 
advertising  manager  to  contract  for  space  in  foreign  mediums 
even  against  the  advice  of  the  export  end,  and  for  the  export  end 


ADVERTISING  IN  FOREIGN  TRADE  165 

to  clothe  excellent  selling  arguments  in  the  most  amusing  of 
amateurish  typographical  garb. 

Not  long  ago,  a  high-priced  motor  car,  for  which  beautifully 
presented  domestic  copy  suggests  exclusiveness  and  all  the 
dignity  which  must  be  assumed  with  the  price  it  commands, 
commenced  advertising  in  foreign  mediums.  Because  it  was 
"an  export  proposition"  the  foreign  sales  manager  insisted  on 
writing  the  copy  and  making  the  layout.  The  result  was  a 
closely  crowded  type  page  with  a  small  cut  of  the  car  itself — and 
yards  and  yards  of  specifications. 

An  Export  Advertising  Tragedy. — The  tragedy  came  when  the 
first  issues  bearing  the  advertisement  appeared.  In  the  same 
section,  and  in  several  cases  on  the  opposite  page,  appeared  the 
advertisement  of  a  car  priced  at  one-third  their  list,  illustrated 
far  more  attractively,  and  whose  skeleton  specifications  seemed 
almost  a  duplicate  of  the  $6,000  car.  Any  sane  buj^er  at  equal 
price,  and  judging  solely  by  the  two  advertisements,  would  be 
forced  to  select  the  $1,950  car,  and  when  he  made  a  price  com- 
parison was  bound  to  feel  indignant  or  amused  at  the  audacity  of 
the  higher-priced  motor  car  maker. 

SURFACE  DIFFERENCES 

Fundamentally,  the  sales  forces  which  have  existed  for  cen- 
turies are  identical  here  or  abroad.  With  the  natural  loss  in 
personality  which  comes  as  we  step  down  the  ladder  from  the 
spoken  word  to  the  written  word  and  the  printed  word,  increased 
care  is  essential  to  maintain  a  profitable  standard  of  effective- 
ness. Surface  differences  which  exist  in  every  market  of  the 
world  must  be  understood  that  the  message  be  presented  in  a 
form  which  will  create  favorable  attention,  not  ignored  to 
become  vast  chasms  too  great  for  any  sales  argument  to  bridge. 
It  is  not  difficult  to  see  that  if  to  a  failure  to  understand  the  nature 
of  the  prospective  customer  be  added  slovenly  or  crude  presenta- 
tion, any  export  advertising  effort  is  self-doomed. 

Costly  Pride. — There  is  one  large  New  York  corporation 
(both  self-sufficient  and  self-satisfied)  which  is  literally  pouring 
several  thousand  dollars  yearly  down  a  spout  which  has  no  end — 
and  charging  it  up  to  "export  expense."  Their  error  is  the 
childishness  of  self-conceit,  for  they  use  space,  valuable  in  its 
potentiality,  in  a  mere  statement  of  their  name,  address  and 


1G6  EXPORT  MERCHANDISING 

cable  address,  not  indicating  in  any  way  the  nature  of  the  line 
of  business! 

They  have  rebuffed  the  very  proprietors  of  the  mediums 
in  which  their  "card"  appears  saying,  "It  is  beneath  our  dignity 
to  explain  who  we  are;  if  they  do  not  know  who  we  are  they  are 
too  ignorant  a  class  for  us  to  care  to  reach."  Yet  these  very 
mediums  reach  market  after  market  wherein  their  goods  have 
never  been  seen! 

Sheer  laziness  is  a  more  common  cause  of  the  "business  card" 
which  is  over-prevalent  in  foreign  newspapers  as  well  as  maga- 
zines. It  does  require  brains  to  make  a  4-inch  single-column 
advertisement  carry  a  real  sales  appeal,  but  it  is  not  an  impossi- 
bility. Let  us  apply  a  common  sense  test.  What  American 
manufacturer  would  fail  to  discharge  a  salesman  who  spent  fifty 
or  even  twenty  dollar's  worth  of  his  time  in  visiting  a  possible 
foreign  buyer — and  merely  saying  in  measured  intervals,  "I 
represent  the  Jones  Manufacturing  Co. — we  make  shirtings," — 
and  then  walking  out! 

The  "Business  Card." — The  only  excuse  (if  there  is  one)  for 
the  "business  card"  here  or  at  home  is  to  keep  a  firm's  name  in 
mind.  As  used  in  the  foreign  trade  it  seems  to  be  the  pet  of  the 
maker  who  has  still  to  make  his  name  known.  To  satisfy  them- 
selves that  such  a  use  of  space  was  criminal,  the  publishers  of  an 
export  journal  ran  two  quarter-pages  side  by  side,  one  giving  the 
name  of  a  novelty  manufacturer,  the  other  an  illustration  of  a 
single  item,  attractively  displayed.  The  first  advertisement  drew 
three  worthwhile  inquiries,  the  latter  $1,200  in  orders. 

TWENTY -TWO  METHODS  OF  USING  EXPORT  ADVERTISING 

It  is  perfectly  fair  to  compare  the  "one  club  player"  at 
golf  to  the  business  man  who  employs  exactly  the  same  advertis- 
ing copy  in  foreign  fields  under  such  varying  requirements  as: 

1.  Introducing  his  firm  and  brands 

2.  Creating  trade  demand 

3.  Creating  consumer  demand 

4.  Introducing  a  product  for  which  no  demand  exists 

5.  Meeting  existing  competition 

6.  Securing  direct  orders 

7.  Securing  orders  indirectly  through  export  commission  houses 

8.  Preparing  the  grovmd  for  a  salesman's  visit 

9.  Preceding  a  mail  campaign 


ADVERTISING  IN  FOREIGN  TRADE  167 

10.  Paving  the  way  for  a  sampling  canipaigu 

11.  Announcing  local  agencies 

12.  Explaining  change  in  prices 

13.  Reasons  for  change  in  policy 

14.  Creating  demand  for  an  article  of  which  the  advertiser's  product  is 
only  a  part  or  attachment 

15.  Creating  demand  for  completed  articles  in  order  to  create  demand 
for  branded  materials. 

16.  Securing  local  information  before  creating  an  agency  or  opening  a 
branch  house  or  branch  factory 

17.  Attracting  public  opinion  to  a  public  need 

18.  Correcting  a  trade  or  pul)lic  abuse 

19.  Counter-acting  existing  ill  will 

20.  Disposing  of  stock  on  consignment 

21.  Directing  public  attention  to  pirated  trademarks  or  patents 

22.  Meeting  an  emergency. 

Every  real  exporter  has  faced  the  necessity  of  using  every 
effort  to  meet  all  of  these  situations,  and  it  is  fair  to  state  that  in 
personal  touch  through  his  salesmen  or  correspondence  that  the 
great  majority  have  shown  their  capabilities  by  making  the 
manner  of  their  handling  entirely  in  accord  with  the  demands. 
It  would  be  a  most  palpable  untruth  to  compliment  more  than  a 
dozen  on  the  intelligence  with  which  they  have  used  export 
advertising    to    work    hand-in-glove    with    their    other    efforts. 

The  Fundamental  Plan. — There  should  be  a  definite  plan 
behind  every  dollar  invested  in  foreign  advertising.  If  the 
export  efforts  of  a  company  must  be  confined  solely  to  advertising 
appeal  it  must  shoulder  the  entire  burden  of  creating  and  main- 
taining sales.  If  the  advertising  is  to  follow  up  an  aggressive 
local  campaign  combining  very  possibly  the  concerted  efforts 
of  salesman  and  agent,  sampling  and  direct  advertising  by 
means  of  circulars,  bvdletins  and  letters,  then  surely  the  follow-up 
should  capitalize  the  lessons  of  the  campaign,  bolster  up  its 
known  defects,  intensify  its  strong  points  and  be  designed  to  act 
very  definitely  in  bringing  together  all  sales  elements. 

And  yet — back  in  1910,  before,  during  and  after  a  driving 
campaign  in  Rio,  involving  a  crew  of  salesmen  and  a  flood  of 
literature,  the  local  dailies  carried  the  same  stale  copy,  unchanged 
since  a  contract  made  six  years  before! 

Consistency  Is  a  Jewel. — In  1912  a  local  pirate  (such  as  may 
exist  in  Calcutta  or  Chicago)  imitated  the  brand  of  a  standard  line 
of  toilet  articles.  The  American  maker  expended  nearly  two 
thousand   dollars   in   legal  investigation  and   prosecution    of  a 


168  EXPORT  MPJRCH A  NOISING 

penniless  adventurer,  warned  dealei's  against  handling  the  line, 
and  ran  with  regularity  every  other  Saturday  the  same  familiar 
advertisement  portraying  an  abandoned  line.  It  is  not  comedy — 
no  waste  of  business  money  is  other  than  a  tragedy — a  degrading 
spectacle  for  youth  and  old  age  alike. 

All  business  men  are  familiar  with  the  new  advertiser  who  had 
been  convinced  that  he  must  buy  space  for  publicity  in  order  to 
enjoy  the  same  prosperity  as  his  advertising  competitor.  We 
all  know  his  indignant  surprise  when  it  is  suggested  that  to  the 
expense  of  white  space  he  pay  the  price  for  brains  to  employ 
that  same  space  intelligently.  The  same  condition  arises 
constantly  when  the  scene  is  shifted  from  domestic  to  foreign 
fields — he  refuses  to  pay  the  price  of  time  spent  in  brain  work  to 
make  his  export  advertising  a  worthy  adjunct  to  his  other  forms 
of  merchandising. 

Let  it  be  put  down  as  an  absolute  rule  that  not  a  dollar  should 
be  spent  in  export  advertising  without  a  definite  object.  Let  it  be 
definitely  stated  as  a  twin  truth  that,  unless  the  advertising  is  so 
planned,  it  has  not  even  a  fighting  chance  of  accomplishing  its 
object. 

The  Advertising  Manager's  Recommendation. — In  1912,  in 
Philadelphia,  a  conference  of  department  heads  was  held,  to  see 
where  additional  sales  voknne  could  be  created  and  profits 
made.  A  plant  capable  of  turning  out  15  per  cent  more  goods 
at  a  fraction  of  a  per  cent  greater  overhead  furnished  a  real 
problem.  To  every  suggestion  that  an  export  trade  be  sought 
there  was  a  sound  reason  for  refusal,  so  far  as  the  then  present 
was  concerned.  Finally  the  advertising  manager,  fresh  from  an 
interview  with  a  particularly  well-informed  representative  of  an 
export  journal,  furnished  the  solution. 

"There  are  in  New  York,"  he  offered,  "a  group  of  business 
interests  known  as  export  houses,  commission  houses,  or  exporters 
and  importers.  These  are  really  resident  buyers  for  foreign 
merchants.  Some  have  their  own  branch  houses  in  foreign 
countries;  others  employ  traveling  salesmen  or  support  agencies. 
This  type  of  buyer  buys  f.o.b.  New  York  and  discounts  in  ten 
days.     Many  are  rated  in  the  million-plus  class. 

"Even  granted  that  we  cannot  at  present  spare  time  to  con- 
vince these  buying  agents  that  they  could  profit  from  handling 
our  lines,  or  bj^  diverting  a  single  salesman  to  any  of  the  countries 
from  which  they  receive  orders,  I  ask,  and  honestly  put  it  in  the 


ADVERTISING  IN  FOREIGN  TRADE  IGO 

form  of  a  question,  is  there  any  reason  why  by  advertising  only 
we  cannot  induce  foreign  merchants  to  order  our  lines  through 
them?" 

A  Modest  Appropriation. — His  company  appropriated  $2,000 
for  the  experiment,  which  might  well  have  followed  the  thousands 
lost  in  export  space  ])uying  instead  of  copying  the  tens  of  thous- 
ands gained,  but  for  the  fact  that  it  was  expended  along  the  lines 
of  an  intelligent  plan. 

The  manufacturer  was  not  in  a  position  to  assume  the  investi- 
gation of  foreign  credits,  the  determination  of  the  many  details 
of  foreign  trade,  but  he  was  wiUing  to  seek  advice  and  follow 
orders,  even  while  realizing  that  by  indirect  dealing  with  the 
outside  business  world  they  naturally  forfeited  some  of  the  possi- 
bilities open  to  those  who  personally  could  cultivate  direct 
relations. 

As  a  result,  this  appropriation  was  spent  to  secure  orders 
through  export  commission  houses;  direct  orders  were  all  but 
rendered  impossible,  and  such  as  were  received  were  referred 
to  commission  houses.  Six  months  passed  without  even  indica- 
tions of  more  than  passing  interest.  Then  the  tide  turned,  and 
the  carefully  prepared  and  presented  sales  talk  via  the  printed 
page  began  to  bring  in  orders. 

Expanding  When  Profits  Come. — The  appropriation  was 
doubled  and  well  within  two  years  the  manufacturer  had  10  of  the 
15  per  cent  surplus  manufacturing  capacity  steadily  at  work  on 
foreign  business.  Their  experience  was  exceptional — but  the 
intelligence  of  their  advertising  was  equally  exceptional,  and 
their  reward  not  out  of  proportion  to  their  skill  in  digging  out 
their  real  problem,  deciding  on  a  means  to  solve  it  and  then 
shaping  the  means  in  a  master-like  manner  to  the  known  end. 

Because  of  the  seeming  difficulty  of  knowing  that  money 
invested  in  local  advertising  in  foreign  markets  is  on  the  same 
sane  basis  demanded  here  at  home,  a  number  of  firms  al)solutely 
refuse  to  spend  any  part  of  their  export  funds  in  other  than  sales 
effort  by  their  salesmen,  in  correspondence  or  in  export  journals 
published  in  this  country  whose  rates  and  circulation  are  a  matter 
of  record. 

A  Salesman's  Plan. — A  rather  amusing  experience  came  to 
one  of  this  type  last  December  when  one  of  their  veteran  sales- 
men, well  known  to  be  highly  skeptical  of  the  power  of  foreign 
dailies,  met  a  critical  situation  in  Cape  Town.     His  firm  received 


170  EXPORT  MERCHANDISING 

a  ca})lc  reading,  "Urgent  necessity  four  hundred  pounds  intro- 
ductory work.  Big  chance  displace  Untermeyer  (a  large  German 
competitor).     Details  impossible.     Wire  approval." 

With  every  confidence  in  the  salesman's  ability  to  cash  in  on 
the  opportunity,  they  cabled  the  requested  authority,  and  were 
rewarded  a  month  later  by  a  record  volume  of  cabled  orders. 
Even  the  president  was  more  than  mildly  interested  to  know  the 
particular  ways  and  means  by  which  the  veteran  had  accom- 
plished such  wonders,  and  his  mail  confirmations  and  explanatory 
letter  were  impatiently  awaited.  To  everyone's  surprise,  the 
orders  were  not  accompanied  by  any  special  reference  to  the 
emergency  and  the  ways  and  means  by  which  it  had  been  met. 
Even  the  bi-monthly  expense  report  when  received  failed  to  reveal 
the  secret  in  the  simple  entry:  "Introductory  expense — 
SI, 867. 87."  The  president  made  occasion  to  write  a  personal 
letter,  and  in  congratulating  the  salesman  expressed  a  mild 
interest  in  the  details  of  the  campaign,  but  this  evoked  only  a 
pleasing  acknowledgment  devoid  of  the  sought-for-secret. 
When  a  second  cable,  this  time  from  Bombay,  was  received. 
"Wire  authority  introductory  expense  four  hundred  fifty 
pounds.  Bigger  chance  than  Cape  Town,"  they  wasted  no  time  in 
making  an  affirmative  answer,  and  writing  frankly  for  full  details. 

Meeting  a  Difficult  Condition. — The  answer  was  absurdly 
simple.  The  veteran  had  run  into  a  hot  bed  of  anti-American 
feeling,  a  wonderful  chance  to  displace  a  formidable  rival,  and  a 
kindly  Fortune  had  made  him  intimate  with  an  American  adver- 
tising manager  of  great  experience  who  had  converted  him  over- 
night. This  good  friend  and  advisor  handled  all  the  details  of  a 
most  effective  newspaper  campaign  and  literally  worked  nights  to 
make  it  make  good. 

The  veteran  knew  that  his  firm  would  "mortgage  the  factory" 
to  back  his  judgment  on  any  sales  proposition,  but  that  nothing 
but  a  long  fight  by  mail  would  get  them  to  change  their  stand 
regarding  newspaper  advertising  in  a  foreign  country. 

There  is  no  firm  which  over-values  an  employee  who  assumes 
unnecessary  authoritj^,  and  no  firm  but  appreciates  the  men  who, 
when  faced  with  a  real  emergency,  combine  initiative  and  ability 
in  a  successful  solution. 

CONTESTING  ESTABLISHED  COMPETITION 
A  rather  striking  incident  in  one  of  the  largest  of  England's 


ADVERTISING  IN  FOREIGN  TRADE  171 

Colonial  dependencies  a  number  of  years  ago  bears  out  this 
statement. 

In  this  market  a  well-known  Scotch  whisky  all  but  monopolized 
demand.  A  capable  business  man,  thoroughly  familiar  with  the 
territory  involved,  and  by  years  of  residence  and  political 
affiliations  able  to  decide  on  its  possibilities,  decided  to  contest 
the  market  with  the  long-established  brand.  His  offer  to  the 
competitor's  resident  agent  that  they  work  hand  in  glove  was 
refused  with  amusement  for  his  audacity,  as  he  anticipated,  and 
he  cabled  his  makers,  "Must  resign  agency  unless  you  assume 
credit  risks  six  months  time,  advance  duty  payments  expend 
six  hundred  pounds  local  advertising.  If  accede  promise  big 
future."  To  this  cable  came  the  laconic,  "All  agreeable,  good 
luck." 

The  Lime  Light  of  Publicity.— The  first  step  this  far-seeing 
agent  took  was  to  have  local  ordinances  passed  prohibiting 
posting  bills  on  public  property  under  penalty  of  a  £100  fine;  the 
next,  to  plaster  the  leading  cities  with  his  huge  posters  bearing 
only  two  words,  the  maker's  name  and  "Scotch."  He  employed 
two  hundred  men  on  that  historic  night.  Through  his  political 
friends  he  was  given  a  most  vindictive  trial,  so  much  so  that  public 
opinion  reacted  in  his  favor,  while  the  police  were  ordered 
to  remove  the  posters,  a  sight  which  caused  huge  crowds  to 
congregate  to  watch  their  more  or  less  futile  efforts.  Needless 
to  state,  this  spectacular  stunt  was  productive  of  publicity  far 
in  excess  of  the  amount  it  cost.  Just  as  the  last  of  the  "scandal " 
was  dying  out,  this  agent  fired  another  bomb  shell  when  the  cur- 
tain of  the  leading  theatre  in  C — was  lifted  disclosing  a  second 
curtain  with  the  same  two  "mystic"  words. 

The  more  than  ripple  of  conversation  thus  caused  was  nothing 
to  the  outburst  when  in  the  second  act  of  the  famous  play  the 
maid  whose  part  called  for  a  silent  entrance  with  a  tray,  bottle 
and  glasses,  advanced,  saying:  "You  must  have  a  glass  of — 
Scotch!" 

Having  carefully  arranged  with  the  manager  of  the  theatre 
for  an  unknown  surprise,  the  agent  was  in  a  position  to  secure 
reaction  from  the  first  unfavorable  comments  by  a  disclaimer, 
and  the  manager  cleared  himself  by  calling  it  (as  it  really  was) 
a  practical  joke  on  the  agent  who  was  entertaining  a  select  social 
party  in  a  box. 

Kahler's  Definition  of  Advertising. — But  export  advertising 


172  EXPORT  MERCHANDISING 

in  its  every-day  role  is  not  one  of  sensational  stunts  or  dranuitie 
surprises;  it  is  like  any  other  sales  force,  of  cumulative  value  if 
intelligence  is  used  in  its  enijiloynient.  Hugh  Kahler  has 
defined  advertising  as:  "A  foi'ce  which  makes  your  goods  less 
apt  to  be  refused  when  offered,"  and  certainly  this  seemingly 
negative  description  has  a  particulai'ly  valuable  application  to 
export  advertising. 

It  is  quite  commonly  asserted  that  no  export  traveler  can 
make  expenses  on  his  first  trip.  This  is  an  exaggeration  based 
on  the  fact  that  no  salesman  without  the  cooperation  of  his 
house  can  hope  to  l)e  nearly  so  good  in  sales  totals  when  the 
burden  of  introducing  the  firm,  the  product  and  the  brand  is 
added  to  his  real  work  of  selling  goods.  Export  advertising  is  an 
excellent  way  to  help  remove  the  necessity  for  the  salesman  in 
bearing  such  an  unfair  Innxlen.  Whether  it  be  in  San  Francisco  or 
San  Fernandez,  a  merchant  or  user  feels  entirely  different  towards 
a  product  which  he  has  never  tried  Init  has  seen  advertised  per- 
sistently, than  towards  the  unknown  of  unknown  parentage. 
It  is,  therefore,  not  too  much  to  claim  that  the  export  advertising 
which  only  "makes  your  goods  less  apt  to  be  refused  when 
offered"  should  be  credited  with  the  expense  of  the  first  "get 
acquainted"  trip  it  renders  unnecessary. 

Helping  the  Export  Salesman.^ — One  striking  campaign  of  this 
nature  preceded  the  visit  to  every  Latin  American  republic  of 
two  salesmen  from  a  Middle  Western  maker  of  fire  extinguishing 
apparatus.  Instead  of  a  careless  use  of  space,  each  advertise- 
ment featured  the  trip,  and  by  use  of  four-color  inserts  gave 
the   itinerary  and  thuml)-nail   photographs   of  both   salesmen. 

The  slogan  used  was,  "If  we  didn't  know  the was  right  we 

could  not  afford  to  make  this  offer."  The  guarantee  referred  to 
involved  deposits  in  each  large  city  and  outlined  the  demon- 
strations which  were  the  salesmen's  greatest  arguments. 

Each  month  the  copy  was  changed,  but  in  every  case  emphasis 
was  laid  on  the  coming  of  the  salesman,  while  as  the  trips  pro- 
gressed photographs  of  orders  taken  and  testimonials  were 
adroitly  introduced  as  proof  positive  that  dealers  would  not  be 
wasting  time  in  giving  them  every  attention  or  taking  undue  risks 
in  ordering  in  advance  of  the  demand  the  salesmen  were  shown 
as  creating  for  dealers  in  other  cities  who  were  carrying  stock 
before  their  arrival. 

Securing  Advance  Distribution. — It  should  not  be  taken  for 


ADVERT  I  SI  NO  IN  FOREIGN  TRADE  173 

granted  that  export  advertising  as  a  means  for  preparing  a  field 
for  later  conquest  by  salesmen  should  be  left  until  the  last 
moment,  or  that  it  is  money  saved  to  delay  in  preparing  the  soil 
for  the  seed.  Very  often  it  is  of  greatest  importance  to  have  the 
framework  for  development  in  partial  distribution,  so  that  the 
salesman  on  reaching  a  city  has  a  skeleton  design  in  the  form  of  a 
dealer  carrying  a  modest  stock  and  consumers  who  can  be  used 
as  reference.  It  is  perfectly  possible  to  build  up  this  far  by 
intelligent  advertising,  for  there  is,  for  example,  even  in  a  trade 
publication  a  very  large  percentage  of  consumer  readers,  thus 
making  it  possible  to  reach  both  classes  at  the  expense  of  a 
single  campaign. 

The  maker  of  paints  will  find  that  in  any  foreign  publication, 
or  export  journal  published  in  the  United  States,  a  very  small 
number  of  subscribers  who  can  handle  his  product  for  re-sale 
compared  to  the  vast  audience  who  are  interested  in  paints  for 
use;  while  in  case  of  a  food  product  every  reader  is  a  potential 
consumer.  The  wise  export  advertiser,  therefore,  plans  to 
balance  his  appeal  so  that  he  will  reach  both  classes  and  draw 
inquiries  from  both.  To  him  it  becomes  an  art  to  turn  a  con- 
sumer inquiry  into  a  dealer  order,  often  using  the  argument  of 
created  demand  with  the  dealer  and  using  the  consumer  inquirer 
as  a  reference  as  to  quality. 

In  the  case  of  a  well  known  New  Jersey  maker  of  phonographs 
it  has  often  been  said  that  the  profit  from  such  "turn  over" 
inquiries  from  users  pays  for  their  entire  export  expense,  and  their 
advertising  is  often  directed  at  the  ultimate  purchaser,  even 
knowing  that  any  order  received  must  be  placed  through  some 
dealer,  often  no  easy  task  to  find  in  their  earlier  years  of  foreign 
sales! 

"Blue  Sky"  Projects. — The  same  brand  of  domestic  common 
sense  that  protects  the  cash  box  against  "blue  sky"  advertising 
j)rojects  here  at  home  must  be  on  guard  toward  similar  fraudulent 
or  over-enthusiastic  schemes  aimed  toward  securing  foreign 
sales  by  mystic  methods.  One  Louisiana  firm  which  has  a 
demonstrably  advertisiblc  product  for  home  markets,  but  which 
never  uses  space  here  at  home,  paid  out  over  a  thousand  dollars 
on  an  "  illustrated  lecture  "  fraud  whose  route  included  cities  1,000 
miles  from  any  sane  I'outing.  One  wonders  whether  the  con- 
tract was  secured  ])y  chlorofoi'm  or  pistol!  One  shamefaced 
president  of  a  large  shoe  concei-ii  sidled  into   the  offices  of  an 


174  EXPORT  MERCHANDISING 

export  organization  not  long  ago  and  in  a  meek  voice  inquired, 
"Do  you  know  of  the  — International  Advertising  and  Distribut- 
ing Company?"  He  was  told  that  they  were  out-and-out 
fakirs,  and  fugitives  from  justice.  "And  it's  my  money  that 
they're  'fugiting'  on!"  he  commented.  As  he  expressed  it, 
"They  told  me  such  a  beautiful  story  I  could  actually  see 
monkeys  coming  out  of  the  cocoanut  trees  to  buy  'Armor  Plate' 
Shoes." 

Selling  goods  by  export  advertising  is  both  an  art  and  a  science. 
It  calls  for  common  sense,  and  with  common  sense,  ends  in 
profits.  There  are  even  in  the  infancy  stage  of  American 
exporting,  manufacturers  who  have  records  of  forty  years'  advertis- 
ing in  foreign  fields.     Ask  them  if  it  pays! 


COMMON  MISTAKES  IN  EXPORT  ADVERTISING 

One  Indiana  manufacturer  who  has  been  exporting  for  over 
forty  years  and  who  has  been  a  consistent  export  advertiser 
confessed  to  the  waste  of  many  thousands  of  dollars  in  his 
foreign  publicity.  This  has  not  been  due  to  fraud  or  to  the 
fault  of  the  media  used.  It  has  been  due  solely  to  a  failure  to 
establish  a  sound  basis  for  export  advertising  copy. 

He  quite  unconsciously  permitted  the  trend  of  domestic  com- 
petition to  influence  his  foreign  copy;  because  his  near-by  rival 
was  bringing  out  close  copies  of  his  latest  novelty  he  did  not 
differentiate  between  domestic  and  foreign  mediums.  So  he 
hammered  away  with  "Beware  of  imitations"  advertising  cam- 
paign abroad  where  his  rival's  goods  were  not  known.  This 
forced  to  the  attention  of  importers  abroad  the  fact  that  novelties 
similar  in  character  could  be  obtained  from  another  source. 

Taking  Too  Much  for  Granted. — Another  mistake  which  has 
been  made  many  times  and  which  is  to  be  found  in  a  great 
majority  of  all  exporting  manufacturers'  advertising  has  been 
too  much  prominence  to  some  minor  improvement  instead  of 
"playing  up"  the  inherent  advantages  of  the  product  itself. 
The  reason  for  the  prevalence  of  this  type  of  error  is  that  too 
much  is  taken  for  granted.  American  manufacturers  forget 
that  what  may  be  a  staple  here  may  be  a  novelty  to  the  foreign 
buyer.  Exporters  also  fail  to  remember  that  the  success  of  the 
very  article  or  line  in  question  was  due  to  the  very  thorough 


ADVERTISING  IN  FOREIGN  TRADE  175 

groundwork  which  accompanied  its  domestic  introduction. 
It  is  a  safe  statement  that  any  product,  in  its  first  introduction  to 
the  foreign  buyer  by  any  user  of  printer's  ink,  shouhl  be  explained 
from  a  standpoint  which  makes  the  reader  famihar  with  its 
reason  for  being,  not  from  a  viewpoint  so  narrow  as  to  allow  a 
side  issue  to  obscure  its  real  worth. 

Care  in  Selection  of  Appeal. — A  striking  example  of  this  very 
fault  is  so  recent  that  it  proves  this  statement.  A  medium-priced 
automobile  that  enjoyed  an  extensive  sale  here  in  the  United 
States  found  last  year  that  a  competitor  at  a  price  $150  less  than 
theirs  had  practically  duplicated  every  point  which  had  made 
their  car  the  leader  in  its  class.  To  meet  this  dangerous  com- 
petition they  searched  for  every  little  superiority  and  focused 
their  domestic  advertising  on  these  minor  points.  At  the  same 
time,  they  began  to  take  a  healthy  interest  in  export  trade,  and 
used  a  number  of  excellent  mediums  with  full  pages  and  back 
covers  which  should  have  brought  pleasing  results.  While  the 
campaign  was  not  a  flat  failure,  it  was  decidedly  unprofitable. 
The  blame  can  be  placed  squarely  on  the  copy  which  made  the  car 
seem  to  be  merely  a  combination  of  a  patent  windshield,  moulded 
steel  fenders  and  an  unusual  electric  tail  lamp,  instead  of  a 
reliable,  well-motored,  up-to-date  car  (which  it  really  was)  at  a 
very  moderate  price.  The  criminal  part  of  it  all  comes  in  the 
fact  that  their  rival  was  absolutely  unknown  abroad  so  that  they 
were  fighting  their  own  shadow  with  a  feather  duster,  instead  of 
fighting  for  really  worthwhile  markets  with  the  heavy  artillery 
of  real  worth. 

Adapting  Copy  to  Its  Task. — In  several  of  the  export  journals 
reaching  Latin  American  countries  is  a  series  of  full-page  adver- 
tisements of  a  machine  far  superior  to  any  made  outside  this 
country  and  which  is  capable  of  cutting  in  half  the  cost  of  a  cer- 
tain part  of  the  manufacture  of  men's  clothes  as  against  present 
South  American  practice.  It  is  conservative  to  say  that  the 
pulling  power  of  the  space  is  only  10  per  cent  of  its  possibilities, 
solely  because  it  is  running  "Safety  first!"  text  in  place  of  point- 
ing out  that  the  machine  will  pay  for  itself  in  three  months,  and  pay 
handsome  dividends  in  even  the  smaller  establishments.  It 
seems  incredible  that  alert  business  men  entrusted  with  spending 
foreign  advertising  appropriations  running  to  five  figures, 
should  choose  to  feature  the  little  hand-guard,  which  appeals 
chiefly  to  the  operative  instead  of  the  worth  of  the  investment 


170  EXPORT  MERCHANDISING 

wliich  will  create  a  real  buyiiig  impulse  in  the  man  by  whom  their 
message  is  read. 

The  point  that  too  many  export  advertisers  overlook  is  the 
imperative  necessity  of  getting  the  reader's  viewpoint.  In  the 
United  States  it  is  seldom  necessary  to  give  this  the  same  care. 
In  many  lines  the  viewpoint  of  the  maker  and  his  possible 
clientele  in  the  domestic  market  is  nearly  identical.  The 
points  which  appeal  to  one  naturally  appeal  to  the  other.  Both 
are  well  aware  of  competitive  offerings.  Therefore,  a  real  neces- 
sity exists  in  domestic  markets  for  turning  to  some  minor  "talk- 
ing point"  to  find  something  to  feature  which  the  competitor's 
product  does  not  possess.  But  until  the  same  competitive  condi- 
tion exists  abroad  the  playing  up  of  differences  should  certainly 
be  subordinated  to  the  best  possible  presentation  of  the  essentials. 

The  Position  of  the  Importer  Abroad. — The  export  advertiser 
who  places  himself  in  the  position  of  the  foreign  buyer,  as  we 
assume  him  to  be,  may  misjudge  him.  But  certainly  we  shall 
not  make  ourselves  as  ridiculous  as  the  American  hosiery  maker 
previously  mentioned,  who  used  an  export  medium  reaching 
only  English-speaking  foreign  countries,  yet  mentioned  a  2  per 
cent  ten  days  date  of  invoice  cash  discount.  This  at  best  could 
only  be  accepted  by  Bermudans,  while  it  certainly  would  offend 
the  careful  importers  in  Australia. 

These  Httle  points  of  out-and-out  error  are  taken  by  serious 
houses  abroad  as  typical  of  the  export  understanding  of  the 
advertiser.  The  importer  abroad  rightly  feels  very  much 
disinclined  to  entrust  to  the  tender  mercies  of  such  a  maker 
shipments  involving  a  real  understanding  of  consular  invoices 
and  customs  classifications.  These  are  indications  of  careless- 
ness and  ignorance  which  might  well  cause  the  importer  vexatious 
fines  and  delays.  He  distrusts  advertisers  who  spend  money  on 
advertising  2  per  cent  ten  days  cash  discount  terms. 

Examples  of  Wasted  Publicity. — Another  atrocity  was  the 
advertisement  of  an  Ohio  patent  medicine.  This  novice  in 
exporting  for  several  months  ran  a  quarter-page  cut  of  its  package 
adorned  with  labels  in  English  and  the  dominant,  "Use  it  all 
the  year!"  in  Spanish,  below\  It  is  safe  to  say  that  not  one  reader 
in  one-hundred  could  even  guess  at  the  nature  of  the  product. 
Another  case  along  the  same  line  came  from  a  firm  which  was  will- 
ing to  spend  $1,200  a  year  in  one  Spanish  medium,  but  unwilling, 
despite  the  magazine's  request,  to  spend  $50  to  have  their  cuts 


ADVERTISING  IN  FOREIGN  TRADE  177 

(which  were  large  and  embellished  with  their  English  slogan) 
made  intelligible  to  the  reader. 

A  motorboat  company  which  had  relied  on  a  quarter-page  in  an 
export  journal,  with  only  a  small  cut  of  their  boat  (using  the 
space  as  a  business  card)  were  induced  to  use  the  major  portion 
of  the  space  for  a  cut  of  the  boat  in  action.  New  text  empha- 
sized its  moderate  price  and  the  maker's  name.  This  brought 
consumer  orders  and  dealer  inquiries  from  cities  which  had 
never  been  considered  as  prospects  for  motorboats.  It  devel- 
oped a  wonderful  new  market  from  which  over  $50,000  was 
taken  in  a  year,  in  addition  to  decidedly  greater  sales  in  known 
territory. 

Class  of  Readers  Reached. — A  most  common  mistake  of 
advertisers  new  to  the  export  field  comes  from  failure  to  investi- 
gate the  classes  which  the  various  publications  reach.  Without 
careful  study  of  the  class  distribution  it  has  been  the  common 
fault  to  use  a  "farmer-consumer"  publication  for  a  "machinery- 
dealer"  product. 

One  nationally-advertised  line  of  shoes  made  the  fatal  error 
of  indiscriminate  use  of  strong  dealer  copy  in  all  their  export 
mediums,  with  the  result  that  consumers  quite  naturally  refused 
to  buy  a  line  that  persistently  harped  on  the  profit  which  dealers 
made  and  showed  clearly  that  the  retail  price  was  inflated.  In 
another  case  a  Massachusetts  patent  medicine  house  lost  an 
opportunity  for  large  sales  by  using  copy  in  an  export  paper  that 
specializes  on  the  wholesale  and  retail  drug  trade,  which  appealed 
to  merchants  to  use  their  elixir  instead  of  to  sell  it. 

The  common  mistakes  in  export  advertising  are  due  to  gross 
carelessness;  failure  to  realize  that  common  sense  will  solve  any 
export  problem,  and  an  unwillingness  to  put  into  the  export 
field  the  keen  analysis  and  persistent  investigating  power  which 
are  responsible  for  domestic  success. 


12 


CHAPTER  XVII 
INDIRECT  EXPORTING 

"  The  man  who  denies  that  inherent  advantages  exist  in  connection 
with  indirect  exporting  forgets  the  past  of  America's  foreign  trade, 
is  not  familiar  with  its  present  and  lacks  vision  of  its  future.  " 

— John  Chapman. 

Channels  of  Indirect  Exporting.  Functions  of  the  Export  Merchant. 
What  Is  an  Export  Commission  House?  The  Field  of  the  Manufacturers' 
Agent  Resident  Abroad.  The  Hybridization  Process.  Overlapping  Activities. 
Unjiist  Accusations  Against  Export  Commission  Houses  Refuted.  Early 
History  of  American  Exporting.  Distrust  Gradually  Vanishing.  Peculiar 
Advantages  of  Indirect  Exporting.  Why  Veteran  Manufacturing  Exporters 
Use  Export  Houses, 

Indirect  selling  is  selling  done  through  some  agency  which 
assumes  the  responsibility  of  the  selling,  and  shares  to  a  certain 
extent  in  the  profit.  This  is  usually  some  house  having  head- 
quarters at  seaboard  and  catering  to  some  distant  field. 

Confusion  in  Nomenclature. — "Export  commission  houses" 
is  used  in  general  parlance  to  describe  any  house  that  acts  as  a 
middle-man  between  the  American  manufacturer  and  the  foreign 
customer.  This  is  not  strictly  correct.  There  are  three  types  of 
organizations  that  enter  into  what  is  commonly  called  "indirect 
exporting."  They  are:  The  export  merchant,  the  export  com- 
mission house,  and  the  manufacturers'  agent  located  on  the 
American  seaboard.  Theoretically,  these  three  types  are  entirely 
distinct  one  from  another. 

The  Export  Merchant. — The  export  merchant  buys  goods  in 
this  country  and  sells  them  abroad;  frequently  he  combines 
importing  with  exporting  and  buys  goods  abroad  and  sells  them 
in  this  country.  He  is  closely  related  to  the  old  New  England 
ship-owner  who  loaded  his  boats  with  the  products  of  New 
England,  sent  them  to  a  foreign  land  and  brought  back  the  pro- 
ducts of  the  foreign  land.  In  many  cases  the  export  merchant 
does  much  of  his  business  in  the  form  of  barter.  The  export 
merchant  buys  and  sells  goods  on  his  own  account,  taking  as  his 
profit  the  difference  between  the  purchasing  price  plus  the 
expenses  of  handling,  and  the  sales  price. 

178 


fNDIIfErr  EXPORTING  179 

The  Function  of  the  Export  Commission  House. — The  second 
type  is  the  export  coiniiiission  house.  The  commission  house, 
theoretically,  does  not  buy  or  sell  on  its  own  account,  but 
handles  goods  on  a  commission  basis;  in  fact,  most  of  its  business 
is  supposed  to  be  of  an  indent  nature — that  is,  orders  placed  by 
buyers  abroad.  The  commission  house  is  not,  in  theory,  sup- 
posed to  go  abroad  for  the  purpose  of  selling  American  products. 
It  is  supposed  to  receive  from  those  foreign  customers  or  clients, 
with  whom  its  connections  are  very  intimate,  indents  or  orders 
for  American  goods.  Then  it  scouts  around  in  this  country  to 
find  some  manufacturer  able  to  supply  just  what  is  wanted,  at  a 
price  that  will  be  satisfactory  to  the  buyer.  The  primary 
commission  house  interest  is  in  the  welfare  of  the  foreign  pur- 
chaser who  pays  the  commission  house  for  its  services.  For  the 
natural  function  of  the  export  commission  house  is  to  act  as  a  pur- 
chasing agent  for  its  foreign  clients  and  is  not  supposed  to  be 
interested  in  developing  a  foreign  demand  for  any  particular  line 
of  American  goods.  Since  it  is  paid  in  the  form  of  a  buyer's 
commission  from  the  foreign  customer,  in  theory  it  acts  exclu- 
sively for  the  importer  abroad. 

How  the  Manufacturer's  Agent  Operates. — The  third  group 
includes  the  manufacturer's  agent,  which  is  similar  to  the  com- 
mission house,  except  that  instead  of  being  closely  connected 
with  the  buyer  abroad  it  is  theoretically  the  agent  for  the  Ameri- 
can manufacturer;  and  after  taking  the  exclusive  selling  rights 
for  a  manufacturer's  line,  a  manufacturer's  agent  is  supposed  to 
go  into  a  foreign  country  with  a  line  of  samples  and  secure 
orders  from  the  dealers,  collecting  a  commission  from  the  manu- 
facturer, not  from  the  buyer,  as  the  commission  house  does. 
The  manufacturer's  agent  is  interested  in  marketing  abroad 
particular  lines  for  which  he  has  taken  the  agency,  usually  the 
exclusive  agency,  in  certain  territories.  A  commission  is  paid 
by  the  manufacturers  whose  goods  he  handles.  He  distributes 
his  goods  through  the  efforts  of  his  salesmen  whom  he  puts  into 
foreign  countries  to  call  upon  prospects  and  secure  orders,  just 
as  domestic  salesmen  do  in  this  country. 

Imaginary  Boundaries. — There  are  then,  the  merchant  who 
buys  and  sells  on  his  own  account,  the  export  commission  house 
whose  function  it  is  to  buy  what  the  client  wants,  and  the  manu- 
facturers' agent,  whose  function  it  is  to  sell  what  the  manufac- 
turer produces.     The  distinction  is  largely  imaginary.     Many 


180  EXPORT  MERCHANDISING 

houses  that  belonged  originally  to  one  of  these  three  groups  have 
entered  all  tlire(»  lickls.  We  find  commission  merchants  not  only- 
buying  and  selling  on  their  own  account,  but  if  they  have  not 
merchandise  which  some  foreign  dealer  needs,  they  are  willing 
to  accept  an  indent  and  secure  the  goods  for  a  commission,  just 
as  a  commission  house  would  do.  On  the  other  hand,  if  the 
commission  merchant  finds  a  manufacturer  making  some  article 
for  which  he  believes  there  is  a  demand,  he  is  not  averse  to 
accepting  the  agency  for  that  article  and  instructing  his  repre- 
sentatives abroad  to  go  out  with  samples  and  push  the  sale  of  it. 

Activities  of  the  Export  Commission  House. — A  commission 
house  does  not  confine  itself  always  to  exacting  commission  from 
foreign  buyers.  If  it  has  sufficient  capital  idle  and  sees  a  par- 
ticularly good  investment  in  some  staple  article,  it  is  likely  to 
invest  in  that  article  and  sell  the  goods  abroad  on  its  own  account, 
taking  the  profit.  Also,  the  commission  house  may  go  outside 
its  function  as  the  representative  of  the  importer  abroad  and 
act  as  an  agent  for  a  manufacturer,  if  the  maker's  line  is  one 
that  might  be  expected  to  meet  with  a  ready  sale.  Similarly, 
a  manufacturers'  agent  occasionally  acts  as  an  export  merchant 
and  frequently  as  a  commission  house. 

Thus,  while  it  is  very  important  to  keep  these  three  groups 
distinct  in  one's  mind,  it  is  likewise  important  to  remember  that 
we  find  them  invading  one  another's  field  to  such  an  extent  that 
it  is  difficult  at  times  to  determine  the  exact  nature  of  the  export 
house. 

Unfair  Criticisms  of  Export  Houses. — There  have  been  many 
accusations  brought  against  commission  houses,  using  the  term 
loosely  now  to  cover  all  three  classifications.  They  have  been 
represented  as  strangling  American  export  trade  and  cheating  the 
American  manufacturer  out  of  a  large  part  of  his  legitimate 
profit  and  adding  to  the  cost  of  merchandise.  A  sufficient 
answer  to  that  is,  that  if  this  were  the  practice  the  commission 
house  would  soon  cease  to  exist,  because  foreign  buyers  are  good 
business  men  and  would  not  trade  with  an  agency  which  added 
to  the  expense  without  rendering  any  commensurate  service. 
American  manufacturers  are  good  business  men.  They  would 
not,  year  after  year,  yield  up  a  part  of  their  profit  unless  there 
were  good  reasons  for  so  doing. 

The  Commission  House  as  a  Pioneer. — The  commission 
houses  went  into  the  foreign  field  in  advance  of  the  American 


INDIRECT  EXPORTING  181 

manufacturer.  They  found  customers  that  the  American  manu- 
facturer could  not  find.  On  the  strength  of  their  own  reputation 
in  foreign  lands  they  marketed  goods  whose  brands  and  quality 
were  unknown.  They  were  pioneers  and  missionaries,  as  far  as 
the  development  of  foreign  trade  is  concerned.  Even  when  that 
stage  was  passed  in  many  countries,  they  continued  to  press  on 
into  new  fields.  In  old  markets  they  financed  transactions  with 
dealers  when  the  manufacturer  was  afraid  of  the  credit  risk. 
They  helped  American  manufacturers  competing  with  foreign 
houses  by  giving  long  credits  to  the  customers  and  at  the  same 
time  giving  the  American  manufacturer  cash  in  New  York — 
which  he  has  too  often  demanded. 

The  Tremendous  National  Value  of  the  Export  Commission 
House. — Export  commission  houses  have  been  an  almost  ines- 
timable factor  in  developing  the  foreign  trade  of  the  United 
States.  They  still  teach,  in  many  cases,  the  American  manu- 
facturer how  to  pack  for  export.  Their  orders  contain  minutest 
instructions  for  packing  and  invoicing.  They  consolidate  at  the 
port  of  shipment  small  consignments  from  a  number  of  manu- 
facturers, making  a  large  consignment  which  could  be  shipped 
abroad  at  an  economical  rate.  They  quote  c.i.f.  prices  to  cus- 
tomers who  would  not  buy  on  any  other  basis.  They  took  the 
export  market  as  they  found  it,  and  they  have  met  the  conditions 
and  difficulties  that  it  has  presented  in  a  way  that  the  average 
manufacturer  has  not  been  able  to  do.  They  have  financed  the 
foreign  trade  of  America  to  a  surprising  extent.  The  frozen 
credits  which  were  in  the  hands  of  the  New  York  commission 
houses  following  the  World  War,  reached  a  stupendous  total. 
It  was  only  because  these  houses  were  so  big  and  strong  and  had 
the  confidence  of  the  banks,  that  a  serious  blow  to  American  trade 
was  averted. 

Dangers  Arising  from  Small  Profit  Margins. — In  many 
instances  the  commission  houses  are  trying  to  do  business  on  too 
small  a  margin  of  profit,  and  they  are  constantly  confronted 
with  the  temptation,  and  in  many  instances  with  the  necessity, 
of  increasing  their  profits.  This  leads  to  unwise  practices.  For 
it  is  not  good  business,  and  it  certainly  is  not  good  ethics,  for  a 
house  to  collect  a  commission  from  both  the  buyer  and  the  seller 
for  the  same  service.  It  is  not  sound  for  a  commission  house  to 
come  before  the  manufacturer  as  a  manufacturer's  agent,  and 
come  before  the  buyer  as  an  indent  house.     It  is  doubtful  ethics 


182  EXPORT  MERCHANDISING 

for  a  c()iniiU8sioii  house  to  ask  a  manufacturer  for  the  exclusive 
seUing  rights  for  his  line  in  a  certain  territory,  and  then  sell  com- 
petitive products  in  that  territory.  The  export  manager  who 
makes  a  connection  with  an  export  merchant  or  an  export 
commission  house,  or  a  manufacturers'  agent,  should  make  a 
careful  investigation  of  the  house — an  investigation  that  should 
be  much  more  far-reaching  than  the  ordinary  credit  investiga- 
tion. He  should  draw  a  most  careful  agreement  with  that  house 
as  to  the  effort  that  it  is  to  put  forth  in  marketing  his  goods. 
He  should  not  be  contented  with  the  threadbare  remark,  "It  is 
to  our  interest  as  well  as  yours  that  these  goods  should  be  sold  in 
large  quantities,  and  you  can  depend  upon  us  to  push  them." 
True  Cooperation. — One  stipulation  that  should  be  insisted 
upon  in  all  agencies  is,  that  when  the  importer  abroad  is  iden- 
tified only  by  the  shipping  mark,  the  manufacturer  shall  know 
in  every  instance  the  name  and  address  of  the  consignee.  More 
than  that,  he  shall  have  the  privilege  of  corresponding  with  him 
and  of  soliciting  further  and  larger  orders  through  the  commission 
house,  and  of  sending  him  sales  helps  and  suggestions  regarding 
his  advertising.  Any  agreement  which  does  not  include  this  is 
prejudicial  to  the  manufacturer. 

ADVANTAGES  OF  INDIRECT  EXPORTING 

The  particular  advantages  in  indirect  exporting  include 
the  eliminating  of  all  credit  risk  to  the  manufacturer,  pro- 
vided, of  course,  that  the  export  house  is  sound  financially. 
This,  to  a  manufacturer  of  some  small  specialty,  is  an  important 
factor,  particularly  if  the  manufacturer  is  not  especially  equipped 
to  handle  export  business  direct. 

Possibilities  for  the  Small  Manufacturer. — A  small  manu- 
facturer who  might  hesitate  to  attempt  to  pass  on  foreign  credits 
or  to  pack  for  foreign  shipment,  or  to  forward  goods  on  foreign 
lines,  as,  for  example,  some  furniture  manufacturer  up  in  the 
western  part  of  Massachusetts,  might  consider  himself  fortunate 
to  be  able  to  find  a  large  New  York  export  house  of  unquestioned 
rating  which  will  give  him  an  order  for  some  of  his  products  and 
tell  him  exactly  how  to  pack  them,  paying  for  them  as  soon  as 
they  reach  New  York  City  and  relieving  him  of  all  responsibility 
as  soon  as  he  mails  his  local  freight  receipt.  This  very  advan- 
tage, however,  shows  that  selling  in  this  way  is  not  exporting 


Fig.    10. — Eversluirp  pencils  in  Mexico.      A  striking  proof  of  p(jster  pos.siljflities 
in  export  merchandising. 


Fiu.    11. — Regal  shoes  in  Chile.      Note  the  hundreds  of  Regal  shoe  cartons  on  the 
shelves  of  "LaEspanola"  Antofagasta. 


INDIRECT  EXPORTING  183 

in  the  true  sense  of  the  word.  It  is  selling  goods  to  a  domestic 
customer  who  is  planning  to  export  them  later.  It  is  only  fair 
that  the  one  who  finds  the  market  and  assumes  the  risk  should 
take  the  profit. 

How  the  Veteran  Manufacturing  Exporter  Profits. — A  further 
advantage  is  the  possibility  of  covering  territory  that  the  manu- 
facturer might  not  find  it  advisable  to  include  in  a  direct  selling 
campaign.  This  advantage  appeals  not  to  the  class  of  manu- 
facturers referred  to  just  above,  but  to  the  manufacturer  who  is 
himself  doing  an  export  business,  but  who  realizes  that  there  are 
certain  isolated  fields  that  he  himself  cannot  reach  at  a  reasonable 
selling  cost.  For  example,  the  manufacturer  may  be  routing  a 
salesman  from  Guayaquil,  south  along  the  Peruvian  coast,  down 
to  Chile  as  far  as  Valparaiso,  across  Argentina  to  Buenos  Aires, 
Montevideo,  up  the  Brazilian  coast  to  Rio  and  home. 

Filling  in  Blank  Sales  Spaces.^ — At  the  same  time  he  may  know 
that  there  is  a  fair  market  for  his  goods  in  Punta  Arenas  in  the 
extreme  southern  part  of  Chile  and  in  Para  in  northern  Brazil. 
At  the  same  time  he  may  have  another  salesman  who  is  selling 
from  New  Orleans,  who  is  covering  the  Central  American  States, 
the  northern  parts  and  river  towns  of  Colombia,  taking  in 
Trinidad,  and  working  back  through  the  West  Indies.  It  would 
be  unwise  for  him  to  incur  the  expense  of  sending  his  salesman 
from  Valparaiso  to  Punta  Arenas,  or  to  send  his  other  salesman 
from  Trinidad  or  Curacao  to  Para.  He  may  therefore  well  make 
arrangements  with  an  export  house  to  cover  Punta  Arenas,  and 
with  another  one  to  cover  Para,  and  prove  himself  a  better 
exporter  than  the  man  who  would  absolutely  refuse  to  have 
anything  to  do  with  a  commission  house  and  insist  upon  sending 
his  men,  at  a  heavy  expense,  into  two  points. 

Further  Advantages. — Similarly,  an  enterprise  may  have  its 
own  selling  organization  in  Australia  and  allow  some  commission 
house  to  sell  its  goods  in  New  Zealand. 

When  the  commission  house  serves  in  either  of  these  two 
ways,  first  by  bringing  orders  from  aV>road  to  the  American 
manufacturer,  who  is  not  interested  in  developing  an  export 
business,  and  second,  by  covering,  at  a  low  cost,  territory  that 
the  manufacturer  cannot  himself  cover,  decidedly  it  is  serving  the 
interests  of  American  exporters. 


CHAPTER  XVIII 

THE   EXPORT   COMMISSION   HOUSE,   THE   IMPORTER 
ABROAD  AND  THE  AMERICAN  MANUFACTURER  AS  CO- 
PARTNERS IN  INTERNATIONAL  COMMERCIAL 
EXCHANGE 

"The  eternal  triangle  in  exporting,  the  importer,  the  maker  and 
the  commission  house,  should  be  a  symbol  of  strength  and  not 
distrust." — Edmands  Bridgeman  Sanger. 

The  Function  of  the  Export  Commission  House.  What  the  Importer 
Abroad  Can  Expect  from  His  Purchasing  Agent.  Tearing  Down  Barriers 
that  Obstruct  Trade.  Mutual  Knowledge  Essential.  The  Export  Com- 
mission House  as  a  Builder  of  Export  Sales.  Examples  of  Proper  Coopera- 
tion. The  Correct  Triangular  Relation.  Ways  in  Which  the  Importer 
Abroad  Can  Help.  A  Sound  Method  of  Handling  Substitutions.  Effect  of 
the  War  on  International  Trade.  Unsound  Interposition  of  Artificial  Obstacles. 
Placing  Responsibility  for  Error.  Model  Instructions  from  Importers.  How 
the  Export  Commission  House  Can  Render  Greatest  Service. 

Between  the  American  manufacturer  and  the  ultimate  con- 
sumer abroad  there  must  be  a  means  of  communication  by  which 
products  can  be  conveyed.  It  is  idle  to  compare  the  varying 
routes  as  to  their  merits.  It  is  as  idle  to  think  of  there  being  one 
ideal  method  of  communication  as  it  is  to  think  of  what  an 
efficient  world  this  might  be  if  it  were  entirely  remade. 

Individual  conditions  and  individual  tastes  are  all  that 
save  existence  from  monotony.  There  is  still  in  this  world 
ample  room  for  the  llama,  the  mule,  the  electric  car,  the  steam 
locomotive,  the  sailing  vessel  and  the  steamship.  There  is 
still  not  only  justification  but  actual  need  of  the  retailer,  whole- 
saler,   commission    house    and    manufacturers'    representative. 

The  Resident  Purchasing  Agent.^ — -The  commission  house  is 
fundamentally  the  resident  purchasing  agent  of  the  importer. 
To  the  commission  house,  therefore,  should  be  delegated  all  of  the 
authority,  and  of  it  should  be  expected  all  of  the  qualifications, 
of  the  purchasing  agent. 

The  foreign  merchant  who,  in  employing  the  services  of  a 
commission  house,  fails  to  recognize  the  exact  nature  of  his 
relationship  to  it,  inevitably  fails  to  realize  on  the  full  possibilities 

184 


THE  EXPORT  COMMISSION  HOUSE  185 

of  the  relation.  What  would  the  importer  abroad  expect  of  an 
individual  sent  by  him  to  New  York,  for  example,  to  investigate 
the  possibilities  of  the  United  States  as  a  nation  of  manufac- 
turers in  direct  relation  to  the  increasing  of  his  profits?  Would 
the  importer  abroad  be  content  to  have  his  own  employee — 
existing  solely  through  the  compensation  he  paid  him — act 
merely  as  an  automatic  clerk  carrying  out  his  specific  requests 
for  the  purchase  of  merchandise?  Would  the  importer  be 
content  to  have  him  silent — a  receiving  instrument  solely, 
hearing  and  obeying  his  commands?  Would  the  importer 
consider  him  as  incapable  of  acting  in  such  a  way  as  to  secure 
for  him  not  only  favorable  prices,  but  also  assistance  and  coopera- 
tion in  the  sales  of  the  articles  he  purchased  at  the  importer's 
behest? 

Experience  an  Asset. — The  commission  house  has  a  tremen- 
dous asset  in  its  experience  which  has  brought  to  it  an  inti- 
mate knowledge  of  many  things  of  value  to  the  importer.  The 
importer  abroad  employing  the  commission  house  as  its  resident 
buyer  in  the  United  States  secures  only  a  fraction  of  the  worth  of 
its  services  when  it  limits  the  commission  house  to  the  mere 
function  of  a  transcribing  machine. 

It  is  absurd  for  either  the  importer  or  the  manufacturer 
to  assume  that  of  necessity  the  commission  house  interposes  a 
barrier  shutting  off  many  things  and  many  services  which  would 
be  possible  in  connection  with  direct  relations.  Put  it  to  the 
test.  Is  there  any  reason  why  the  importer's  purchasing  agent 
should  in  any  way  conflict  with  his  best  interest?  Would  any 
importer  feel  his  intimacy  with  the  manufacturer  strengthened 
or  weakened,  if,  instead  of  doing  business  over  a  gap  of  many 
thousands  of  miles,  he  had  a  trusted  member  of  his  firm  who,  at 
closer  range,  conducted  a  great  part  of  the  constant  stream  of 
negotiations?  In  what  way  could  the  importer  consider  such 
an  employee  a  disadvantage  to  him? 

Costly  Mystery. — It  is  because  even  after  centuries  have 
elapsed  the  triangular  relations  of  importer,  exporter  and  manu- 
facturer are  still  largely  a  matter  of  mystery  that  inherent 
strength  of  combination  is  often  mistaken  for  inherent  weakness. 
Just  so  long  as  the  commission  house  is  regarded  by  either 
merchant  or  manufacturer  as  a  mere  convenience,  and  not  as  a 
powerful  agent,  so  long  will  its  latent  force  remain  concealed. 
No  brief  is  held  for  the  importer,  commission  house  or  manu- 


186  EXPORT  MERCHANDISING 

facturcr  who  is  content  to  assume  that  international  connncrcial 
cxcliangc  of  today  is  a  mere  matter  of  the  buyer  and  seller  rela- 
tion. If  the  importer  feels  that  the  manufacturer  has  nothing 
to  offer  but  goods;  if  the  commission  house  feels  that  its  scope 
begins  and  ends  with  the  transcribing  of  items  ordered;  and  if  the 
manufacturer's  vision  sees  no  more  in  the  order  received  from 
the  commission  house  than  so  many  goods  for  so  many  dollars, 
the  world  of  merchandising  has  retrogressed  rather  than  advanced 
since  the  days  when  the  first  two  men  met  and  exchanged  with 
each  other  the  things  which  one  had  for  different  articles  in  the 
possession  of  the  other. 

For  the  commission  house  to  perform  its  full  function,  it 
must  know  much  of  both  the  importer  and  the  manufacturer;  and 
it  must  know  the  importer's  needs  and  the  manufacturer's  possi- 
bilities. This  is  not  mere  idle  theory.  An  example  proves  this 
beyond  doubt.  A  dozen  years  ago  there  were  erected  in  Peru 
buildings  designed  for  public  service.  The  New  York  corpora- 
tion in  charge  of  the  construction  work  sent  many  of  its  skilled 
force  to  supervise  the  task.  Naturally,  with  them  they  brought 
to  Peru  their  personal  preferences  for  many  things.  Quite 
naturally  they  failed  to  find  in  the  stocks  of  the  merchants  in 
Lima  many  of  the  articles  to  which  they  were  accustomed.  One 
able  Lima  merchant  was  keen  enough  to  appreciate  that  the 
number  of  this  body  from  the  United  States  w^ould  justify  him 
in  catering  to  their  needs.  Somewhat  to  his  surprise  he  found 
that  several  articles  which  they  required  were  manifestly  superior 
to  anything  he  had  previously  carried  in  stock. 

Underestimating  Demand. — In  placing  his  order  for  small 
quantities  of  many  products  with  his  resident  buyer  in  New 
York — a  well-known  commission  house — he  felt  that  he  was 
meeting  the  full  requirements  of  the  situation.  Had  the  incident 
ended  with  the  carrying  out  of  his  assumption,  it  would  not  have 
been  related  here.  His  purchasing  agent — the  commission 
hou.se — saw  in  the  situation  possibilities  which  it  was  in  a  far 
better  position  to  see  than  the  Lima  merchant.  Fortunately, 
the  order  was  accompanied  by  a  letter,  explaining  by  chance  in  a 
paragraph  the  reason  for  the  small  purchases  of  many  products 
not  previously  imported  into  Peru. 

The  commission  house,  acting  upon  this  clue,  ascertained  from 
the  construction  corporation  the  size  of  the  project,  the  number 
of  Americans  who  had  gone  to  Peru  from  New  York  in  the  party. 


THE  EXPORT  COMMISSION  HOUSE  187 

and  even  listed  by  name  every  individual.  With  this  informa- 
tion it  was  easy  for  the  commission  house  to  know  in  advance  of 
actual  demands  on  the  Lima  merchant  many  of  the  future  require- 
ments of  the  group. 

Trebling  an  Established  Business. — Going  a  step  farther,  the 
commission  house  by  correspondence  and  visitation  acquainted 
over  one  hundred  manufacturers  with  the  situation,  asked  each 
to  select  from  its  many  lines  the  ones  which  would  naturally 
appeal  not  only  to  the  new  colony  in  Peru,  but  also  to  the 
Peruvian  market  in  general.  Acting  on  its  own  initiative  it 
secured  samples  and  quotations  and  included  these  with  the 
Lima  merchant's  orders.  As  a  result,  the  merchant  who  was 
keen  enough  to  order  promptly  the  most  pressing  requirements, 
was  placed  in  a  position  so  that  in  twelve  months  from  the  time 
that  his  original  order  was  mailed  in  Lima  his  total  business  was 
trebled. 

From  an  incident,  the  presence  of  the  supervisors  of  construc- 
tion had  been  changed  into  an  event.  The  commission  house, 
from  its  commanding  position  at  the  apex  of  the  triangle,  was 
able  to  see  possibilities  invisible  to  both  the  Lima  merchant  and 
the  manufacturers  of  the  United  States. 

It  would  require  a  volume  to  unfold  the  details  of  the  plan 
which  in  a  year  trebled  the  merchant's  gross  sales.  The  funda- 
mental idea  behind  the  plan  was  to  acquaint  manufacturers 
with  an  existing  situation  unknown  to  them,  to  direct  the 
manufacturers  in  such  a  way  that  they  would  select  from  their 
many  products  the  ones  most  apt  to  meet  the  requirements  of 
the  most  valuable  market,  and  to  urge  these  manufacturers  to 
explain  so  fully  the  uses  and  merits  of  the  articles  selected  that 
it  would  be  a  simple  matter  for  the  Lima  merchant  to  determine 
quickly  and  accurately  the  possibilities  for  profit  each  article 
offered  to  him. 

Anticipating  a  Market. — A  second  example  supplies  further 
proof  of  the  value  of  the  commission  house  as  a  resident  pur- 
chasing agent.  Eighteen  years  ago  the  markets  of  the  world 
were  supplied  in  a  certain  line  entirely  by  articles  made  in 
England,  Germany,  France  and  Italy.  There  were  in  the  United 
States  four  large  manufacturers  making  similar  products,  but 
none  of  these  manufacturers  had  any  interest  in  the  possibilities 
of  sales  beyond  the  borders  of  the  United  States.  A  far-seeing 
New  York  commission  house,  noticing  that  its  clients  abroad 


188  EXPORT  MERCHANDISING 

imported  largely  through  them  articles  of  allied  lines,  instituted 
an  inquiry  (not  with  a  single  client,  but  of  world-wide  scope)  to 
find  out  the  reason  why  such  an  important  class  of  goods  was 
wholly  ignored.  The  replies  from  their  own  representatives 
and  from  their  letters  of  inquiry  showed  that  immense  quantities 
were  being  purchased  from  Europe  and  that  out  of  over  three 
thousand  importers  approached,  not  one  knew  that  products  of 
this  nature  were  made  in  the  United  States. 

Prosecuting  the  inquiry  still  further,  the  commission  house 
secured  samples  of  the  lines  enjoying  the  greatest  popularity 
in  each  important  market,  together  with  the  prices  at  which 
these  were  sold.  With  these  examples  assembled  and  selling 
prices  tabulated,  the  commission  house  instituted  an  inquiry 
into  the  relative  abilities  of  the  four  American  manufacturers. 
This  inquiry  included  not  only  the  quality  of  the  products  made 
but  also  the  financial  resources  of  each  and  the  ability  of  each 
to   handle    properly   orders  for  shipment  to  foreign  markets. 

Dominating  a  Territory. — This  was  seventeen  or  eighteen  years 
ago.  Today  the  American  manufacturer  selected  by  that  com- 
mission house  enjoys  over  60  per  cent  of  the  world's  total 
imports  in  his  line.  Of  the  remaining  40  per  cent,  other  manu- 
facturers in  the  United  States  divide  more  than  half.  This 
condition  cannot  be  considered  entirely  typical  because  it  so 
chanced  that  the  products  of  these  American  manufacturers  were 
in  quality,  attractiveness,  convenience  and  value  decidedly  a 
better  purchase  for  merchant  and  consumer  than  those  previously 
supphed  from  Europe.  It  is  only  fair  to  say  that  it  is  seldom 
that  the  manufacturers  of  any  one  nation  can  claim  such 
superiority. 

This  illustration  is  of  importance  to  the  importer,  not  because 
the  inquiry  and  events  which  succeeded  it  increased  consumption, 
but  rather  because  it  transferred  from  Europe  to  the  United 
States  a  certain  volume  of  business.  Better  articles,  greater 
interest  on  the  part  of  the  makers  to  expand  their  sales  by  coopera- 
tion with  the  importer  and,  above  all,  the  constant  efforts  of  the 
commission  house  to  introduce  the  line  into  new  fields,  combined 
to  increase  consumption.  It  may  be  estimated  conservatively 
that  the  inquiry  has  doubled  the  profit  to  the  importer  who  used 
the   commission   house   on   this  line   as  his   purchasing  agent. 

The  Super-purchasing  Agent. — The  better  type  of  purchasing 
agent  looks  about  him  in  order  to  make  sure  that  his  final  selec- 
tion is  the  pick  of  the  entire  field,  and  not  merely  the  best  choice 


THE  EXPORT  COMMISSION  HOUSE  189 

of  a  limited  portion  of  the  possible  field.  The  commission  house 
whose  policy  is  to  be  in  touch  with  the  best  articles  manufactured 
(often  long  before  they  are  exported)  is  the  one  which  is  com- 
parable to  the  purchasing  agent  who  insists  on  making  his  selec- 
tion from  the  entire  field. 

Just  as  there  are  in  every  country  many  merchants  who  never 
give  consideration  to  increased  profit  by  importation  of  new  lines 
of  merchandise  for  which  profitable  latent  demand  exists,  but 
which  demand  they  never  seek  out,  so  in  the  United  States  (as 
in  other  manufacturing  countries)  there  are  many  makers  of 
most  desirable  merchandise  whose  eyes  are  confined  to  the 
domestic  field. 

The  commission  house  is  in  a  position,  by  its  knowledge  of  the 
articles  preferred  for  good  reasons  in  the  United  States,  to  bring 
together  the  reticent  buyer  and  the  reticent  maker  to  their 
mutual  advantage.  This  is  a  real  service — a  service  tremen- 
dously important  because  it  leads  to  unsuspected  profits. 

Establishing  a  Wholesaler  Abroad. — Not  many  months  ago 
the  son  of  a  wealthy  merchant  in  a  Central  American  republic 
decided  to  seek  his  fortune  several  thousand  miles  away  from 
home.  He  desired  to  enter,  as  a  wholesaler,  a  market  in  which 
there  were  already  a  score  of  wholesalers  ostensibly  confining 
their  efforts  to  the  line  of  merchandise  which  he  intended  to  sell. 
Because  this  young  man  felt  himself  in  need  of  advice  as  to  the 
exact  type  of  articles  in  the  market  largely  unknown  to  him,  he 
sought  the  counsel  of  a  commission  house  in  New  York.  To 
his  surprise  (since  he  had  come  for  advice  on  comparatively  few 
points)  they  suggested  his  postponing  of  the  definite  establish- 
ment of  business  in  his  new  field  until  they  had  made  an  investi- 
gation for  him. 

Their  inquiry  showed  that  with  twenty  rivals  the  field  was 
apparently  pre-empted  because  of  exclusive  arrangements  with 
the  brands  most  in  demand.  The  inquiry  was  not  allowed  to  drop 
with  this  rather  discouraging  first  set  of  replies.  The  commis- 
sion house  made  a  careful  analysis  of  all  the  manufacturers — 
some  six  hundred — who  together  represented  the  resources  of  the 
United  States  in  the  allied  lines  in  which  the  prospective  whole- 
saler was  interested. 

Exhaustive  Investigations. — By  careful  tabulations  and  by 
further  investigation,  the  commission  house  finally  turned  over 
to  the  wholesaler  a  finely  balanced  line  of  connections  whose 


190  EXPORT  MERCHANDISING 

products  would  certainly  be  well  received.  Of  even  greater 
importance,  every  manufacturer  selected  by  this  commission 
house  was  interested  personally  in  the  joint  efforts,  so  that  they 
felt  a  very  human  interest  in  the  success  of  the  buyer.  By 
having  the  commission  house  as  a  center,  it  was  possible  to 
arrange  for  the  issuing  in  Spanish  of  a  two  hundred-page  catalog 
which  included  only  the  articles  especially  adapted  to  the  new  field, 
and  to  share  the  expense  with  the  buyer.  As  a  result,  one  of  the 
finest  catalogs  ever  issued  by  a  wholesaler  was  ready  for  dis- 
tribution among  the  retail  trade  simultaneously  with  the  arrival 
of  a  shipment  covering  the  items  listed. 

This  distribution  of  catalogs  to  the  retailer  was  accom- 
panied by  a  concerted  selling  effort  by  these  separate  manufac- 
turers in  behalf  of  their  new  client.  The  plan  worked  out  by  the 
commission  house  was  so  timed  that  its  effectiveness  was  greatly 
increased. 

Initiative  an  Essential. — The  commission  house  is  the  resident 
buyer  of  the  importer  abroad.  He  is  not  an  automaton  unless 
the  importer  makes  him  into  one.  If  the  importer  directly  or 
inferentially  insists  that  he  is  an  automaton  vending  machine 
and  is  to  return  to  him  nothing  in  the  way  of  service  other  than 
the  exact  goods  called  for  by  the  coin  deposited  in  the  machine, 
then  the  importer  cannot  anticipate  the  full  returns  on  his  invest- 
ment in  him. 

While  the  purchasing  agent  of  a  large  corporation  here  in  the 
United  States  carries  out  quite  automatically  many  of  the  duties 
of  his  position  (such  as  buying  to  the  best  advantage  the  exact 
brands  specified  by  various  departments)  nevertheless,  in  a 
non-automatic  field  he  earns  his  full  compensation  by  his  direct 
attention  and  loyal  interest  in  the  welfare  of  the  corporation 
itself. 

The  commission  house,  in  order  to  earn  for  the  importer 
the  compensation  he  pays  it,  must  be  kept  constantly  in  touch 
with  the  importer's  immediate  needs.  It  is  hardly  possible 
for  the  importer  to  tell  the  commission  house  too  much  about 
himself,  his  field  of  action,  his  capabilities  for  increased  sales  and 
his  most  obvious  lines  for  expansion.  If  the  importer  is  reticent 
in  this  he  will  secure  only  a  fraction  of  his  share  of  the  possi- 
bilities of  his  buying  representative  in  the  United  States. 

The  Duty  of  the  Merchant  Abroad. — The  day  has  long  since 
passed  when  the  merchant  in  any  corner  of  the  world  feels  that  his 


THE  EXPORT  COMMISSION  HOUSE  191 

part  in  the  world's  existence  is  that  of  an  automatic  vending 
machine.  If  the  merchant  does  no  more  than  base  his  stocks  of 
merchandise  on  the  expressed  needs  of  his  customers,  he  has  risen 
a  step  on  the  merchandising  ladder.  As  he  grows  to  study  the 
needs  and  tastes  of  his  clientele,  as  he  appeals  to  its  imagination 
and  its  pocket  book  by  attractiveness  of  store  arrangement 
and  fixtures,  he  profits  by  the  service. 

The  merchant  of  today  realizes  that  the  consumer  has  entrusted 
to  him  in  no  small  measure  the  determination  of  what  should  be 
offered.  The  merchant  of  today  knows  by  daily  proof  that  he 
must  anticipate  the  needs  of  his  customers.  The  merchant  is  in  a 
far  better  position  to  know  what  the  manufacturers  of  the  world 
are  offering.  He  is  in  a  far  better  position  to.  judge  of  the  merits 
of  comparative  offerings.  All  these  factors  combined  make  it 
incumbent  for  the  merchant  to  be  always  on  the  alert  to  improve 
his  service  to  his  customers  through  the  quality,  as  well  as  the 
variety,  of  his  offerings. 

The  manufacturer  of  today  is  not  content  to  supply  only  goods 
of  the  quality  and  variety  passed  down  to  him  from  untold 
generations.  He  has  risen  from  the  point  where  he,  too,  was  an 
automatic  vending  machine. 

Profits  by  Close  Association. — Because  of  the  similarity  in 
business  growth,  merchant  and  manufacturer  have  often,  in 
coming  into  direct  contact,  profited  immeasurably  by  close 
association  with  each  other.  The  merchant  has  learned  that  the 
manufacturer's  stock  did  not  begin  and  end  with  the  few  varieties 
known  to  him.  The  manufacturer  has  learned  that  the  possi- 
bilities of  sales  in  the  merchant's  city  were  not  limited  by  the 
small  total  of  the  initial  order.  Together  merchant  and  maker 
have  cooperated  in  order  to  insure  the  largest  column  of  sales  and 
the  greatest  satisfaction  of  consumers. 

That  there  is  value  in  contact  of  this  nature  between  the 
manufacturers  in  the  United  States  and  the  mei'chants  in  other 
market-places  of  the  world  is  not  a  matter  of  opinion;  it  is  a 
matter  of  proved  fact.  There  are  small  markets,  scores  of  them, 
in  which  this  co-partnership  of  maker  and  merchant  has  resulted 
in  tremendous  development  of  international  commercial  exchange. 
The  cooperation  has  led  not  only  to  increased  importation  of 
American-made  goods,  but  also  very  often  has  led  importations 
into  the  United  States  of  the  products  of  these  mai'kets. 

The  Present  Day  Triangle. — Is  there  any  sound  reason  why  the 


192  EXPORT  MERCHANDISING 

advantages  of  contact  between  maker  and  merchant  should  be 
permitted  to  vanish  when  the  merchant  instead  of  buying  in 
person  direct  from  the  manufacturer  makes  his  purchases  through 
a  New  York  commission  house?  It  is  unfortunately  true  that  if 
we  depend  solely  upon  present-day  facts  the  answer  must  be  that, 
regardless  of  the  necessity  of  the  laws  of  contact,  a  situation 
exists  which  is  positively  harmful.  Fortunately,  however, 
there  are  many  instances  to  prove  that  the  triangular  arrange- 
ment of  merchant,  commission  house  and  manufacturer  is  not 
inherently   weak   from    the    standpoint    of    cooperative    effort. 

The  commission  house  is  fundamentally  an  employee  of  the 
merchant,  acting  just  as  a  purchasing  agent  under  salary  acts. 
It  can  be  seen  clearly  that  if  instead  of  handicapping  the  com- 
mission house,  the  importer  extends  to  it  the  compliment  of 
confidence,  great  and  new  fields  will  open.  The  commission 
house  is  not  a  non-productive  middleman,  but  is  a  live, 
vital  force,  occupying  a  peculiar  position  in  the  world's 
marketing. 

Peter  Need  Not  be  Robbed  to  Pay  Paul. — Another  angle 
deserves  analysis.  There  are  ways  and  means  by  which  the 
importer  abroad  can  enjoy  in  many  instances  the  full  services 
of  the  commission  house  and  yet  not  rob  himself  of  the  undeniable 
advantages  of  close  acquaintanceship  and  direct  contact  with  the 
manufacturers.  It  is  manifestly  impossible  for  the  importer's 
purchasing  agent — the  commission  house — to  know  in  fullest 
detail  every  profit-bringing  possibility  of  each  and  every  manu- 
factm-er  in  the  United  States.  It  is  obviously  an  impossibility 
for  his  purchasing  agent — the  commission  house — to  know  the 
attitude  of  each  and  every  manufacturer  toward  each  and  every 
market. 

One  of  the  most  important  features,  from  the  standpoint  of  the 
manufacturer,  is  the  need  of  representation  in  any  market. 
It  is  quite  natural  that  any  manufacturer  should  feel  willing  to 
spend  no  little  time  and  expense  when  the  introduction  of  his 
products  in  markets  new  to  him  was  in  the  balance.  It  neces- 
sarily follows  that  the  commission  house  should  not  interpose 
any  barrier  between  the  maker  who  is  desirous  of  making  a 
special  effort  in  a  new  field  and  the  merchant  who  would  receive 
the  valued  benefit  of  such  efforts. 


THE  EXPORT  COMMISSION  HOUSE  193 

DUTIES  OF  MAKER,  MERCHANT  AND  EXPORT  HOUSE 

International  trade  has  now  approached  a  point  which  shows 
one  reason  for  the  failure  of  the  triangular  relation  of  merchant, 
commission  house  and  manufacturer  to  reach  100  per  cent 
of  efficiency.  If  the  merchant  is  indifferent  to  the  assistance 
which  the  manufacturer  is  in  a  position  to  give;  if  the  commission 
house  deems  itself  merely  a  forwarding  and  financial  agent;  or  if 
the  manufacturer  is  blind  enough  to  believe  that  because  his 
sale  is  made  to  a  commission  house  in  the  United  States  it  is, 
therefore,  merely  domestic  business — then  efficiency  is  thrown  to 
the  winds. 

It  is  of  interest  here  to  look  at  the  possibilities  by  studying 
an  example  taken  from  a  recent  experience.  In  one  of  the 
smaller  American  republics  a  merchant,  attracted  by  the  adver- 
tisement in  an  export  journal,  of  an  American  manufacturer,  felt 
it  to  be  part  of  business  prudence  to  ascertain  the  salability  of  the 
product  advertised.  With  his  order  for  various  items  made  by, 
perhaps,  a  dozen  different  manufacturers,  he  forwarded  to  his 
resident  buyer  in  the  United  States — a  prominent  New  York 
commission  house — three  items  of  several  mentioned  in  the 
advertisement.  The  total  amounted  to  less  than  $20,  for  the  line 
was  one  composed  of  myriads  of  small  articles  of  low  unit  value. 

The  Importance  of  the  Commonplace. — It  will  be  seen  from 
this  description  that  the  incident  was  not  an  unusual  one  in  its 
initial  stages.  Every  day  thousands  of  merchants  are  including 
with  their  orders  for  staple  merchandise  of  brands  already 
established  in  their  markets,  supplementary  orders  for  small 
quantities  of  lines  which  they  have  not  previously  handled. 
Because  this  is  not  a  commonplace  the  results  of  this  example  are 
of  imperative  importance. 

The  merchant  was,  it  must  be  confessed,  more  far-seeing  than 
many.  He  saw,  for  example,  that  it  would  not  be  an  entirely 
fair  test  of  the  salability  of  these  new  articles  if  he  merely  placed 
them  in  his  stock  without  comment.  So  when  he  ordered  these 
few  items  from  the  commission  house,  he  wrote  on  the  same 
mail  direct  to  the  manufacturer  this  letter: — 

"I  am  ordering  today  through  Messrs.  Blank  &  Co.  the  following 
goods  of  your  manufacture : 

"I  feel  from  the  necessarily  brief  description  of  these  which  appears 

in  the  July  issue  of •  that  there  is  a  strong  possibility  that 

they  will  prove  admirably  suited  to  this  mai-kct. 

13 


194  EXPORT  MERCHANDISING 

"You  will  ;ip|)irci;ite  the  fact  that  your  lines  are  not  yet  known  here. 
This  letter  is  written  in  hopes  that  you  will  be  able  to  supi)ly  nie  with 
attractive  propaganda  which  will  aid  me  in  securing  from  consumers  in 
this  city  a  display  of  interest  which  will  warrant  me  in  ordering  your 
lines  in  larger  (juantities  later  on. 

"1  enclose  a  photograph  of  my  establishment.  This,  with  the  knowl- 
edge of  the  importance  of  my  firm  which  you  can  gain  through  the  usual 

channels,  and  particularly  through  the  information  on  file  with , 

will  enable  you  to  determine  just  how  much  cooperation  you  can  fairly 
extend  with  the  anticipation  of  securing  profitable  results." 

Profits  from  Better  Acquaintance. — The  manufacturer  was  in 
no  way  extraordinarily  devoted  to  ideas  of  trade  expansion. 
Like  hundreds  of  other  American  manufacturers  he  was  vitally 
interested  in  his  domestic  market,  and  was  extending  his  foreign 
trade  carefully — but  not  with  blind  enthusiasm.  Because  of  the 
business-like  communication  received,  he  could  hardly  fail  to 
investigate  the  possibilities  it  outlined. 

As  a  consequence  of  his  investigation  of  the  possibilities  of 
the  market,  as  well  as  of  the  reputation  and  ability  of  the 
merchant,  he  included,  without  charge,  with  the  small  initial 
order,  goods  actually  in  excess  of  the  order  itself.  Further, 
he  included  propaganda  in  the  form  of  attractive  sales  helps 
bearing  the  merchant's  name  and  address.  Still  further,  he 
enlisted  the  cooperation  of  the  commission  house  (already 
familiar  with  the  merits  of  his  products)  so  that  they  took 
a  personal  interest  in  writing  the  merchant  of  the  demand 
enjoyed  by  the  manufacturer's  products  in  many  other  markets 
which  the  commission  house  served. 

Today,  the  merchant  who  went  out  of  his  way  to  write  the 
frank  letter  we  have  just  read  is  agent  for  the  manufacturer,  and 
has  exclusive  rights  which  he  values  at  several  thousand  dollars 
per  year. 

Properties  of  Existing  Channels  of  Trade. — The  commission 
house  serves  as  a  constant  channel  of  trade,  and  its  importance 
in  the  triangular  arrangement  has  by  no  means  diminished. 
There  are  several  ways  in  which  the  commission  house  of  today 
serves  both  this  maker  and  this  merchant.  One  merchant  now 
places  two  large  stock  orders — one  in  April  and  one  in  October. 
During  the  balance  of  the  year  he  places  monthly  (when  ordering 
merchandise  of  other  manufacture)  small  assortments  of  items, 
specialties   and    novelties,    for   which    the    demand    cannot    be 


THE  EXPORT  COMMISSION  HOUSE  195 

determined  with  sufficient  accuracy  to  establish  correct  figures 
semi-annually. 

Whenever  the  manufacturer  brings  out  any  new  sales  helps, 
issues  any  new  forms  of  display  fixtures,  or  bulky  advertising 
material,  he  takes  advantage  of  the  fact  that  the  commission 
house  is  forwarding  regularly  orders  for  other  manufacturers 
to  this  merchant,  and  thus  is  able  to  include  at  the  very  lowest  of 
transportation  cost  these  very  important  factors  in  the  develop- 
ment of  his  sales  through  this  merchant. 

The  commission  house  has  aided  both  this  manufacturer 
and  this  merchant  in  another  important  manner.  While  the 
manufacturer's  lines  were  inclusive  in  the  industry  represented, 
it  so  chanced  that  the  merchant's  scope  of  business  lay  in  fields 
well  removed  from  this  general  line  of  merchandise. 

Analysis  of  the  Needs  of  the  Foreign  Merchant. — The  com- 
mission house  which  had  studied  the  merchant's  problems  saw  in 
the  successful  exportation  of  the  manufacturer's  lines,  the 
certainty  that  the  manufacturer  would  profit  by  linking  these 
more  closely  to  its  other  activities — by  the  addition  of  at  least 
four  kindred  but  non-competing  products.  With  this  in  mind,  it 
sought  out  among  the  many  manufacturers  in  the  United  States 
those  whose  products  were  of  excellent  value,  and  whose  reputa- 
tion for  assistance  to  their  customers  was  already  established,  and 
found  most  of  them  glad  of  the  opportunity  it  offreed. 

Today,  the  merchant  who  three  years  ago  ordered  twenty  dollars' 
worth  of  goods  from  a  new  source  of  supply  is  selling  thousands  of 
dollars'  worth  in  the  general  division  of  business  in  which  the 
original  manufacturer  was  but  one  unit. 

Through  the  whole-hearted  cooperation  of  the  commission 
house  the  original  maker  has  profited  through  the  establishment 
of  the  merchant  as  a  dealer  directly  in  his  most  important  class 
of  trade,  whereas,  at  the  outset,  his  lines  were  merely  incidental 
to  the  merchant's  general  line  of  business.  The  merchant 
has  profited  by  the  careful  balancing  of  his  business,  and  through 
the  fact  that  he  is  now  generally  regarded  in  his  own  city  as  the 
best  source  of  supply  for  a  whole  new  range  of  products. 

Artificial  Obstacles  Must  Not  be  Created. — ^Years  ago  com- 
mission houses  were  pioneers  in  international  commercial 
exchange.  They  sought  out  buyers  for  American-made  goods 
and  sought  out  markets  for  the  products  of  countries  outside 
of  the  United  States.     Because  of  this  pioneer  service  some  have 


lOf)  EXPORT  MERCHANDISING 

failed  to  see  that  in  the  development  of  the  world's  commerce 
and  in  the  development  of  the  world's  merchandising  there  is  any 
justification  for  even  the  slightest  acquaintance  between  the 
merchant  and  the  manufacturer.  Fortunately,  this  attitude 
(which  can  fairly  be  called  short-sightedness)  is  confined  to  the 
few  and  has  long  since  been  relegated  to  obscurity  by  the  many. 

The  commission  house  which  interposes  the  slightest  obstacle 
to  freedom  of  communication  and  contact  between  merchant  and 
manufacturer,  owes  to  itself  as  well  as  to  its  employer — the 
merchant — some  reason  for  its  action.  It  will  prove  difficult, 
it  can  safely  be  ventured  to  assert,  for  any  commission  house  to 
prove  its  right  to  arrogate  to  itself  an  importance  which  it  does 
not  earn.  It  can  earn  its  position  as  the  important  link  in  com- 
mercial transactions  not  by  a  policy  of  repression  but  only 
through  a  policy  of  coordination. 

Frankness  as  a  Fundamental. — The  importer  abroad  can 
secure  the  cooperation  of  manufacturers  whose  products  he 
orders  through  commission  houses,  not  by  stealth,  but  by 
frankness.  It  is  the  importer's  right  to  enjoy  whatever  aids  the 
manufacturer  is  desirous  of  extending.  It  is  his  right  to  com- 
municate with  the  maker  of  the  goods  he  offers  to  his  customers. 
It  is  the  importer's  right  to  expect  from  his  purchasing  agent — 
the  commission  house — a  willingness  to  aid  him  through  intro- 
ductions to  sources  of  supply,  and  through  entire  willingness 
to  include  with  his  orders  whatever  samples  and  other  propa- 
ganda material  the  maker  has  to  offer.  Going  a  step  further, 
is  is  the  importer's  right  to  expect  the  commission  house  to 
transmit  to  the  maker  his  knowledge  of  him  and  his  needs. 

There  is  nothing  to  fear  from  any  angle  in  frankness  in  business 
relations.  Surely  the  importer  is  not  planning  to  abandon  the 
commission  house  that  has  proved  itself  a  worthy  link  in  his 
merchandising  chain,  merely  because  it  has  introduced  him  to 
another  friend! 

The  Great  Future  of  the  Commission  House. — In  the  field 
which  the  commission  house  serves  it  has  been  shown  there  is  no 
more  comparison  between  it  and  any  other  form  of  service  than 
between  the  llama  and  the  airplane.  The  commission  house 
is  not  a  thing  of  the  past,  but  is  facing  a  very  useful  future, 
whose  scope  is  greater  than  its  tremendous  past. 

The  commission  house,  like  the  maker  and  the  merchant,  how- 
ever, can  realize  its  greatest  possibilities  for  expansion  only  as  it 


THE  EXPORT  COMMISSION  HOUSE  197 

serves.  The  importer  can  secure  its  most  effective  service  by 
showing  himself  desirous  of  doing  his  share.  The  importer 
abroad  must  serve  by  cooperation  with  his  purchasing  agent, 
and  with  his  source  of  suppKes. 

There  have  been  many  unusual  developments  which  have 
arisen  in  connection  with  transactions  in  international  com- 
mercial exchange.  Since  the  war  era  it  is  perfectly  natural 
that  their  percentage  has  risen.  It  does  not  take  a  prophet  to 
see  that  their  percentage  will  continue  to  increase. 

The  Effect  of  War. — It  is  still  polite  in  many  circles  to  ignore 
the  effect  of  the  late  war  on  international  trade.  It  is  folly  to 
blind  oneself  to  any  obstacle  in  the  business  road.  If,  instead  of 
blinding  ourselves,  contenting  ourselves  with  sophistries  and 
maintaining  optimism  without  effort  to  make  the  optimism  more 
than  the  mirage  of  past  normal  conditions,  we  recognize  diffi- 
culties; quite  often  we  can  overcome  them.  Today,  those  who 
serve  the  ultimate  consumer  in  countries  ranging  from  pole  to 
pole  must  adapt  themselves  to  conditions  as  they  are,  while 
endeavoring  to  make  conditions  as  they  would  like  to  have  them. 
One  of  the  most  important  steps  which  they  must  execute  as  well 
as  contemplate  is  the  removal  of  imaginary  obstacles  in  their 
international  commercial  relations. 

It  has  been  proved  that  it  is  possible  to  secure  cooperation  of 
manufacturers  in  connection  with  orders  placed  with  commission 
houses.  Wherever  there  have  been  found  any  flaws  in  what  is 
admittedly  a  long-established,  reliable  and  valuable  channel  of 
trade,  it  has  been  found  that  the  fault  was  not  one  inherent  in  the 
method  of  merchandising,  but  a  fault  of  one  of  the  three  parties 
in  the  triangle  composed  of  the  merchant,  the  commission  house 
and  the  manufacturer. 

HOW  THE  COMMISSION  HOUSE  AIDS  IN  MARKETING 

A  concrete  illustration  shows  clearly  the  interposition  of  an 
artificial  obstacle.  A  manufacturer  in  the  United  States  of  a 
line  of  products  of  rather  technical  nature  enjoys  distribution 
throughout  the  world  which,  while  by  no  means  complete,  is, 
nevertheless,  remarkably  widespread.  Experience  has  taught 
him  that  his  lines  require  more  than  mere  presentation  to  both 
merchant  and  user.  In  order  to  build  up  his  foreign  trade  he 
sends  regularly  to  markets  large  and  small  his  staff  of  representa- 


198  EXPORT  MERCHANDISING 

tiv("s.  Tli(\s(>  arc  more  than  salesmen.  They  are,  i)ar(i('ularly 
in  new  markets,  "missionaries" — men  who  go  straight  to  the 
user  in  behalf  of  the  merchant  and  point  out  wherein  this 
manufacturer's  products  are  of  value. 

From  the  nature  of  their  lines  there  is  a  constant  demand  for 
parts  as  well  as  complete  articles.  The  comission  house  performs 
a  very  vital  service  because  of  this  peculiarity.  The  merchant 
ordering  a  thousand  dollars'  worth  of  general  merchandise  can 
advantageously  have  included  with  his  shipments  a  few  hundred 
dollars'  worth  of  parts  and  lines  of  minor  importance  made 
l)y  this  manufacturer.  These  would  not  be  sufficient  for  a 
minimum  freight  shipment. 

Unsound  Practice  Blocks  Progress. — This  manufacturer  is 
often  cnil)arrassed  by  an  obstacle  which  is  clearly  artificial.  The 
merchant  will  place  with  a  representative  of  the  manufacturer 
an  order  for  parts  and  complete  articles  for  shipment  through, 
and  payment  by,  a  definitely  named  commission  house.  The 
manufacturer's  salesman  reports  the  order  direct  to  the  manu- 
facturer, who  in  turn  communicates  with  the  commission  house, 
specifying  exactly  what  the  order  contains,  whom  it  is  for  and 
when  shipment  will  be  ready  to  be  included  with  other  goods 
going  forward.  It  is  not  at  all  uncommon  for  the  commission 
house  in  such  a  case  to  reply  that,  while  the  merchant  is  known 
to  them,  they  have  neither  instructions  nor  authority  to  accept 
delivery  or  make  payment  for  the  goods;  and  even  when  the 
manufacturer  is  in  a  position  to  supply  them  with  the  signed 
order,  there  are  still  frequent  cases  where  the  commission  house 
expresses  itself  as  feeling  under  obligations  to  communicate  with 
the  merchant  before  authorizing  shipment. 

Obviously  this  is  an  unhealthy  condition — an  artificial  obstacle 
for  which  there  should  be  a  remedy.  After  analyzing  a  number 
of  cases  of  this  nature  it  must  be  concluded  that  it  is  fair  to  place 
decided  blame  on  all  three  parties  involved.  The  manufacturer's 
salesman  should  have  made  certain  that  the  same  mail  which 
conveyed  the  merchant's  order  to  the  manufacturer  also  conveyed 
confirmation  of  the  order  by  the  merchant  direct  to  the  com- 
mission house.  The  merchant,  regardless  of  the  suggestion  of 
the  manufacturer's  salesman,  should,  as  a  matter  of  business, 
have  advised  his  purchasing  agent — the  commission  house — 
not  only  of  the  transaction  in  a  gerxMnl  way  but  should  have 
suppli(Ml  full  details. 


THE  EXPORT  COMMISSION  HOUSE  199 

Dividing  the  Responsibility.— The  commission  house  in  many 
cases  should  shoulder  the  blame.  Through  its  knowledge  of 
the  integrity  of  the  merchant  and  of  the  manufacturer,  it  should 
have  been  not  only  willing  but  also  anxious  to  prove  of  real 
service  by  considering  the  matter  not  as  something  of  business 
routine  but  as  of  a  personal  and  important  nature.  With  this 
in  mind,  and  the  often  present  small  size  of  the  transaction,  it 
should  be  willing  to  trust  to  judgment  rather  than  authority 
and  accept  the  order  for  shipment  and  payment.  Whenever  in 
such  circumstances  evidence  is  obtainable  from  the  manufacturer 
that  the  order  was  placed  in  good  faith,  as  shown  by  the  signatiu'e 
of  the  merchant,  it  is  not  too  much  to  expect  of  the  commission 
house  that  it  should,  in  absence  of  direct  confirmation,  rely  upon 
evidence  which  it  would  consider  as  sufficient  to  act  upon  in 
connection  with  its  own  personal  daily  business  affairs. 

Instances  of  an  entirely  different  nature  but  involving  artificial 
obstacles  are  not  infrequent.  All  prove  that  the  three  points  of 
the  triangle — merchant,  commission  house  and  manufacturer — 
should  work  in  harmony.  All  prove  that  the  co-partnership 
idea  is  a  farce  unless  deeds  as  well  as  words  prove  it  to  be  of 
admitted  value.  All  prove  that  merchant,  commission  house 
and  manufacturer  should  today  work  with  coordinated  effort, 
not  only  to  solve  problems  which  must  inevitably  present  them- 
selves for  solution,  but  also  to  remove  the  source  of  problems. 

The  importer  can  help  his  commission  house  to  perform  its  duties 
more  effectively  if  he  will  anticipate  problems  rather  than  create 
them. 

The  Need  for  Full  Knowledge. — There  is  another  angle, 
doubly  important  today  because  of  conditions  which  exist. 
Co-partners  should  free  themselves  of  the  idea  that  only  enough 
information  should  be  furnished  each  other  to  establish  beyond 
doubt  financial  responsibility.  This  incident  may  seem  to  be 
far-fetched.     But  is  it  far-fetched  or  obvious? 

There  is  in  one  of  the  divisions  of  Australasia  a  firm  established 
only  five  years  ago.  It  is  a  newcomer  in  its  chosen  line  of  trade. 
It  is  in  direct  competition  with  a  dozen  firms  established  from 
thirty  to  seventy -five  years.  This  newcomer  entered  into  busi- 
ness life  only  a  short  time  before  the  war  started.  However,  it 
is  today,  not  because  of  the  war  but  in  spite  of  the  war,  a 
prominent  factor  in  the  city  it  serves.  It  is  a  fiini  of  young 
men.      It  has  felt  fi'oin  tli(>  moment  of  its  estal)lisliin('nt  that  no 


200  EXPORT  MERCHANDISING 

false  sense  of  pride  should  prevent  it  from  a  full  acquaintance 
with  those  in  a  position  to  be  of  service  to  it. 

Before  it  sought  merchandise,  before  it  sought  credit  and  before 
it  sought  representation,  it  sought  to  establish  its  policy  in  the 
minds  of  those  commission  houses  and  those  manufacturers  in 
the  United  States  with  whom  it  wished  to  enter  into  business 
relations. 

Its  first  letters  and  accompanying  enclosures  told  of  the  firm's 
desires.  It  did  not  content  itself  merely  with  a  statement  of 
assets  and  immediate  liabilities.  It  went  into  detail  as  to  the 
field  into  which  it  was  entering.  It  told  of  the  lines  it  could 
successfully  handle  and  of  the  limitations  it  had  set  as  its 
boundaries. 

This  initial  exposition  has  been  followed  up  every  three  months, 
again  not  only  with  a  balance  sheet  but  also  with  a  statement  of 
its  needs,  an  intimate  account  of  the  class  of  trade  it  serves  and 
particularly  the  kinds  of  merchandise  it  has  found  itself  in  a 
position  to  handle. 

Instructing  the  Purchasing  Agent. — Its  instructions  to  the 
commission  houses  (for  there  are  several  which  serve  as  its 
purchasing  agents)  are  unique.  It  recognizes  the  superior 
position  today  of  the  commission  house.  It  tells  its  purchasing 
agent  frankly  that  it  wants  the  goods  specified  when  they  are 
obtainable.  It  makes  clear,  however,  that  if  the  exact  goods 
are  not  obtainable,  the  commission  house  is  or  is  not  requested  to 
use  good  judgment  in  selecting  other  similar  articles.  A  few 
lines  from  a  recent  letter  of  instructions  are  worth  quoting  here : 
"It  has  been  our  experience  in  dealing  with  manufacturers  in 
the  United  States  that  before  the  stock  shortage  of  an  item 
exists  in  foreign  trade  the  same  situation  has  developed  in  con- 
nection with  domestic  trade.  Almost  invariably  we  have  found 
that  these  manufacturers  have,  with  the  cooperation  of  their 
domestic  customers,  determined  upon  a  regular  policy  of  supply- 
ing some  particular  article  for  the  one  on  which  stock  is  exhausted, 
or  have  frankly  expressed  themselves  as  being  unable  to  supply 
an  adequate  substitute. 

"It  is  requested  of  you  to  advise  manufacturers  unable  to 
supply  the  exact  items  designated  by  us  to  act  exactly  as  they 
would  for  one  of  their  closest  merchant  friends  in  the  United 
States.  It  is  requested  of  you  further  that  when  the  manufac- 
turer is  unwilling  to  accept  this  responsibility  or  frankly  in 


THE  EXPORT  COMMISSION  HOUSE  201 

doubt  of  the  acceptability  in  our  market  of  a  substitute  acceptable 
in  the  domestic  market  that  you,  with  your  knowledge  of  our 
market  and  our  personal  needs  as  a  basis,  determine  whether  or 
not  substitution  shall  be  made." 

The  Vexing  Problem  of  Substitutions. — This  Australasian 
merchant  goes  a  step  in  advance  even  of  these  unusually  specific 
instructions.  He  continues:  "Our  instructions  regarding  sub- 
stitutes apply  only  to  the  products  of  the  manufacturer  of  the 
articles  designated  unless  we  specifically  note  beneath  the  item 
ordered  that  we  wish  you  to  seek  other  sources  of  supply  in  case 
the  product  named  cannot  be  purchased  from  the  manufacturer 
named.  This  provision  is  made  because  we  do  not  wish  to 
assume  unnecessarily  the  burden  of  introducing  to  our  customers 
products  of  makers  not  regularly  on  our  list.  In  general  we 
prefer  substitution  of  some  similar  article  of  a  manufacturer 
with  whom  we  have  had  previous  relations  through  you,  rather 
than  the  filling  of  our  orders  with  competitive  products,  even 
when  these  approximate  more  closely  the  article  designated  so 
far  as  appearance,  capacity,  etc.,  are  concerned." 

The  importer  abroad  can  help  his  commission  house  to  be  of 
greatest  service  to  him  by  studying  this  example  and  determining 
now  how  far  its  provisions  can  be  adopted  by  the  importer. 
He  can  help  his  commission  house  to  serve  him  most  effectively 
by  instructing  it  in  writing  in  such  a  manner  that  his  general 
policy  is  a  matter  of  record.  The  importer  can  help  his  com- 
mission house  to  be  of  greatest  service  to  him  by  making  clear 
at  the  time  he  orders  just  what  his  wishes  are  in  regard  to  every 
item  which  is  of  importance  to  him. 

Only  a  few  months  ago  a  case  came  to  the  attention  of  an 
export  organization  which  illustrates  the  importance  of  such  a 
set  of  instructions.  A  firm  in  Chile  placed  with  its  commission 
house  an  order  for  twelve  items  of  articles  made  by  a  hardware 
manufacturer  in  Philadelphia.  By  return  mail  the  manufac- 
turer told  the  commission  house  that  it  could  make  immediate 
delivery  of  ten  of  the  twelve  items  exactly  as  specified.  It  said 
that. there  would  be  a  delay  of  from  six  to  nine  weeks  in  filling 
either  of  the  remaining  items. 

When  Should  Items  be  Canceled? — It  recommended  the 
canceling  of  one  of  the  items  because  there  was  no  closely 
related  substitute  available.  It  recommended  the  filling  of  the 
remaining  item  with  an  article  which,  while  differing  decidedly 


202  EXPORT  MERCHANDISING 

in  app(>araiK'o,  served  tlic  same  purpose  and  could  be  used 
harmoniously  in  connection  with  the  goods  ready  for  shipment. 
The  conunission  house  considered  the  advisability  of  cabling  for 
instructions,  Init  found  on  investigation  that  without  a  sample  in 
the  hands  of  the  merchant  a  cable  would  not  be  a  remedy.  As 
a  result,  it  authorized  shipment  of  the  ten  items  in  stock  and  the 
suspension  of  the  other  two  items. 

The  details  of  correspondence  exchanged  can  be  skipped  over 
to  arrive  at  the  facts,  which  were  these:  The  merchant  would 
have  welcomed  not  only  the  substitution  suggested  by  the 
manufacturer,  but  also  the  filling  of  the  remaining  item  with  an 
article  made  by  the  manufacturer  but  not  listed  by  him  at  home 
or  abroad.  It  developed  that  the  merchant  in  ordering  had  been 
guided  solely  by  the  catalog,  and  that  the  entire  twelve  items  were 
not  so  much  a  question  of  mature  judgment  as  guesses  as  to  the 
most  suitable  lines  to  order.  If  the  merchant  had  written  his 
commission  house  of  the  situation  which  existed  in  his  city,  telling 
the  state  of  the  stock  and  the  withdrawal  of  European  manu- 
facturers' articles,  it  would  have  enabled  the  commission  house 
to  act  intelligently.  The  commission  house  would  then  have 
consulted  with  the  manufacturer,  discussing  the  suitability  of  the 
articles  suggested  in  ordering,  and  the  final  result  would  have 
been  the  selection  of  eight  instead  of  twelve  items,  which  would 
have  comprised  the  complete  assortment  necessary  to  meet 
every  legitimate  demand. 

An  Adequate  Solution. — ^This  is  a  matter  of  record,  not  a 
matter  of  conjecture.  When,  as  a  result  of  the  correspondence, 
conditions  were  fully  portrayed,  the  manufacturer  was  able  to 
bring  his  full  resources  to  bear  on  this  problem.  The  solution 
was  the  standardization  of  the  eight  lines  mentioned,  and  today 
these  eight  lines  are  the  dominant  ones  in  the  Chilean  city. 

Many  manufacturers  are  unable  to  show  in  any  printed  list 
or  catalog,  the  lines  which  must  be  discontinued.  The  importer's 
buyer  in  the  United  States — his  commission  house — is  often  in  a 
position  to  know  of  these  when  it  is  a  matter  of  weeks  rather 
than  months  before  stocks  will  be  exhausted. 

How  the  Triangle  Can  Prosper. — The  commission  house  can 
be  of  greatest  service  to  the  importer  if  it  is  a  matter  of  record 
with  it,  not  in  the  form  of  the  orders  the  importer  has  placed  but 
through  his  wishes  expressed  in  correspondence,  on  just  what 
products  he  wishes,  if  possible,  protection,  little  or  great,  as  the 


THE  EXPORT  COMMISSION  HOUSE  203 

circumstances  may  permit.  The  commission  house  can  be  of 
greatest  service  to  the  importer  if  he  makes  it  possible  for  it  to 
discuss  frankly  and  intelligently  with  manufacturers  just  what 
the  importer  most  rec^uires. 

The  time  has  come  for  merchant,  commission  house  and 
manufacturer  to  unite  in  the  extermination  of  every  formality 
which  handicaps.  Today  every  precaution  has  taken  on  a  value 
which  cannot  be  ignored.  Those  interested  in  the  development 
of  international  commercial  exchange  must,  by  being  men  of  vision 
and  men  of  wisdom,  act  upon  the  reflection  mirroring  the  needs 
of  their  co-partners. 


CHAPTER  XIX 
THE  EXPORT  CATALOG  AS  A  SALESMAN 

'A  catalog  must  be  either  a  salesman  or  a  failure.  It  must  be 
more  than  a  convenience  to  aid  the  buyer.  It  must  be  a  positive 
force  having  a  definite  place  in  the  selling  campaign." 

— Herbert  R.  Maxwell. 

Function  of  the  Export  Catalog.  Comparison  of  the  Catalog  and  the 
Personal  Salesman.  Cover  Stock  and  Designs.  Losses  through  Inadequate 
Catalogs.  Catalog  Should  Make  it  Easy  to  Buy.  The  Catalog  as  a  Corre- 
spondence Time-saver.  Thoroughness  and  Balance  Typical  of  European 
E.vport  Catalogs.  What  a  Catalog  Should  Contain.  The  Use  of  Action 
Photographs.  The  Catalog  as  an  Educator.  As  a  Factor  in  Aiding  Salesman 
in  the  Field.  Translation  of  the  Export  Catalog.  Average  Domestic  Catalog 
not  Translatable.     Rules  for  Checking  the  Export  Catalog. 

To  think  of  the  export  catalog  merely  as  a  condensed  card 
index  of  products  and  prices  is  a  great  mistake.  Such  a  mistake 
is  equivalent  to  regarding  the  sales  force  as  merely  a  saving  of 
buyer's  energy  by  not  compelling  the  buj^er  to  write  out  and  mail 
his  orders.  It  is  of  primary  importance  to  consider  the  export 
catalog  as  a  salesman  and  not  as  a  necessary  evil  of  the  non- 
productive class.  If  it  is  looked  down  on,  made  to  feel  that  it 
should  wear  second-hand  clothes,  subsist  on  crumbs  from  the  sales 
table,  then  it  surely  will  repay  only  in  kind. 

The  Field  of  the  Export  Catalog. — There  are  not  a  few  manu- 
facturers whose  domestic  selling  organizations  cover,  through 
their  own  representatives,  every  town  of  average  size  in  the 
United  States.  It  is  safe  to  say  that  no  manufacturer  in  any 
country,  through  his  own  sales  force,  similarly  covers  every  city 
of  average  size  in  the  world.  This  fact  has  direct  bearing  on  the 
export  catalog.  A  handsome  export  catalog  may  be  of  only 
passing  assistance  to  the  salesman's  personal  attack.  But  it  is 
frequently  the  attention-arrester,  the  desire-creator,  and  the 
action-compeller  in  export  sales  based  on  mail  campaigns.  The 
first  thing  a  catalog  should  do  is  invite  perusal.  Strangely 
enough,  this  elementary  principle  has  only  been  appreciated  in 
comparatively  recent  years.  Compare  the  newsstand  of  today 
with  that  of  a  decade  ago.     The  percentage  of  attention-arresting 

204 


THE  EXPORT  CATALOG  AS  A  SALESMAN  205 

magazine  covers  is  over  90  per  cent,  as  against  the  former  20  to  30 
per  cent.  Compare  export  catalog  covers  today  with  those  of 
yesteryear.  In  1900  the  average  catalog  cover  bore  on  poor 
stock  a  wood  cut  of  the  factory !  Today,  there  are  export  catalogs 
whose  covers  rival  those  of  our  leading  magazines.  The  average 
advertising  and  even  export  manager  knows  today  more  of  cover 
stocks,  because  there  is  so  much  more  to  know,  than  the  expert 
paper  men  of  two  decades  ago.  The  average  importer  knows,  too, 
that  the  alert  manufacturers  do  not  permit  unattractive  covers, 
although  some  small  and  inferior  makers  may  have  good  looking 
ones. 

Selection  of  Cover  and  Paper  Stock. — What  cover  and  paper 
stock  are  the  most  attractive?  There  is  no  correct  answer  and 
the  advertising  man  or  printer  is  usually  an  adult  against  the 
average  infancy  of  the  export  man,  when  it  comes  to  paper  and 
type.  One  sound  rule  is  that  the  stock  of  the  cover  shall  dignify 
the  text  it  holds,  shall  create  a  good  impression  of  value,  shall  be 
strong  enough  to  withstand  the  wear  and  tear  during  its  lifetime 
and  shall  not  soil  or  mar  too  easily.  Beware  of  the  delicate 
colors,  remembering  that  gray  will  often  answer,  or  that  onyx 
does  not  show  finger-marks  as  quickly  or  easily  as,  for  example, 
lilac. 

The  lack  of  true  desire  for  export  profits  is  expressed  by  manj^ 
American  manufacturers  by  their  small,  unattractive  and  non- 
salesmanlike  export  catalogs.  It  is  folly  to  expect  such  catalogs 
to  be  valuable  sales  producers.  It  is  only  fair  to  admit  that  many 
domestic  catalogs  are  overloaded  with  minor  lines.  No  good 
export  catalog  is  loaded  with  lines  and  subdivisions  of  lines 
which  divert  the  attention  of  the  importer  abroad  from  the 
more  important  lines  upon  which  the  profits  from  export  sales 
must  largely  depend.  There  is  a  vast  difference,  however, 
between  overloading  an  export  catalog  with  non-essentials  and 
the  parsimony  which  dictates  the  curtailing  of  the  export  catalog 
to  an  envelope  enclosure,  3  by  5  inches  in  size,  without  illustra- 
tions and  printed  in  one  color. 

Establishing  Reputation  for  Desirability. — It  must  be  accepted 
as  a  fact  that  it  is  possible  for  the  American  manufacturing 
exporter  to  impress  his  personality  upon  importers  abroad  by  his 
export  catalog.  It  should  be  a  substantial  aid  in  conveying  the 
impression  to  the  importer  that  it  is  issued  by  a  most  desirable 
source  of  supply.     It  should  be  a  tangible  proof  of  the  ability  of 


206  EXl'UliT  MERCHANDISING 

the  manufacturer  to  export  well,  as  contrasted  with  the  mere 
ability  to  make  good  products.  The  importer  admiringly 
contemplates  the  well-bound,  well-arranged  and  attractive 
export  catalog.  Unconsciouslj^  he  gathers  from  it  an  idea  of  the 
personality  of  the  exporting  manufacturer — the  intangible 
something  which  his  experience  has  taught  him  as  leading  to  the 
desirable  business  connection. 

It  cannot  be  emphasized  too  often  nor  too  strongly  that 
domestic  reputation  does  not  imply  world  recognition.  This  is 
hard  for  an  American  to  understand.  It  is  only  through  a 
constant  series  of  proofs  that  it  becomes  at  all  plausible  to  think 
that  firm  names,  which  have  become  household  words  here  at 
home  since  childhood,  are  still  meaningless  in  many  parts  of  the 
world. 

Making  the  Catalog  Representative  of  the  Enterprise. — The 
head  of  an  export  organization  relates  an  incident  which  proves 
this  point.  He  was  handed  an  eight-page,  8)^-by  11-inch  illus- 
trated price  list,  by  a  large  importer  from  one  of  the  British 
Colonies,  and  asked,  "  Do  you  chance  to  know  anything  of  this  firm  ? 
I  need  a  connection  with  some  maker  of  a  similar  line  of  goods. 
Some  of  these  things  look  interesting  to  me,  but  I  don't  want 
to  tie  myself  up  to  a  small  concern  that  cannot  fill  my  orders, 
and  who  don't  make  a  well-balanced  line."  The  flimsy  eight-page 
folder  was  the  sole  export  catalog  of  a  $10,000,000  corporation. 

A  much  smaller  corporation — one  so  small  that  it  would 
be  hardly  recognized  as  a  competitor — had  issued,  several 
years  before,  an  export  catalog  of  exceeding  merit.  If  by  any 
chance  this  small  maker  had  stumbled  on  the  fact  that  this 
particular  importing  merchant  from  the  Far  East  was  thinking 
of  adding  a  line  of  their  type,  and  in  consequence  had  sent  their 
catalog,  an  immediate  agency  connection  would  have  resulted. 
This  would  have  closed  a  most  desirable  connection  to  the  later 
appeals  of  the  far  bigger  company  with  the  inferior  catalog. 

Coupling  the  Catalog  to  the  Sales  Letter. — One  of  the  chief 
functions  of  the  export  catalog  is  to  make  buying  easy.  It  is 
certainly  advisable  that  the  export  catalog  should  remove  the 
burden  from  correspondence  of  explaining  standardized  details. 
The  good  export  catalog  in  turn  makes  possible  good  export 
sales  letters,  by  providing  in  the  best  place  information  which 
otherwise  would  interfere  with  the  function  of  the  sales  letter. 
The  very  great  majority  of  over-long  export  sales  letters  are 


THE  EXPORT  CATALOG  AS  A  SALESMAN  207 

over-long  because  proper  consideration  and  proper  construction 
of  the  export  catalog  have  not  been  considered  as  vital. 

Simply  as  an  insurance  against  oversight,  it  is  wise  to  include 
in  the  opening  pages  of  an  export  catalog  all  standardized 
practices  which  relate  to  the  making  and  handling  of  an  order. 
Not  only  does  this  lead  to  stronger  letters  (because  they  are 
thus  freed  from  the  necessity  of  cut-and-dried  paragraphs)  but, 
with  the  possible  exception  of  discount,  it  makes  the  catalog  or 
price  list  sufficient  unto  itself  as  a  salesman. 

European  Recognition  of  Need  of  Balance. — One  criticism 
which  foreign  merchants  are  justified  in  making  when  comparing 
export  catalogs  from  this  country  with  those  of  European 
manufacturers,  is  the  lack  of  balance  of  which  we  are  almost 
constantly  guilty.  In  our  domestic  catalogs  it  is  often  good 
salesmanship  to  give  a  large  amount  of  space  and  to  lay  particular 
emphasis  on  some  novelty  a  step  in  advance  of  domestic  competi- 
tion. Our  subconscious  mind  leads  us  to  assume  erroneously 
that  we  should  follow  the  same  practice  in  our  export  catalog. 
Often  "familiarity  breeds  contempt,"  and  we  relegate  to  an 
insignificant  position  the  very  line  on  which  depends  the  success 
of  a  foreign  campaign.  Similarly,  we  emphasize  abroad  some 
minor  feature  of  our  products  without  thinking  that  we  are 
following  domestic  practice  in  making  the  most  of  some  little 
thing  which  we  alone  possess. 

It  may  well  be  (and  quite  often  is)  the  case  that  in  thus  laying 
stress  on  the  minor  conveniences,  we  are  over  looking  the  impor- 
tant fact  that  the  article  as  a  whole  is  not  a  common  one  in  other 
markets.  Possibly  it  is  the  fundamental  idea,  rather  than  some 
mere  refinement,  that  requires  explanation.  The  absurdity  of 
overlooking  this  point  is  obvious  on  second  thought.  Take  for 
example  an  imaginary  case.  Assume  for  the  moment  that  as 
this  is  written,  automobiles  are  unknown  outside  the  United 
States.  We  can  all  be  amused  at  the  thought  of  a  manufacturer 
who,  as  a  pioneer  in  exporting  automobiles,  urges  foreign  dealers 
to  lay  in  a  stock  of  his  cars  because  his  car  has  a  valve-in-head 
motor. 

Absurd  Illustrations  Too  Prevalent. — This  would  be  no  greater 
perversion  of  introductory  technique  than  is  seen  in  every  issue 
of  export  journals,  and  that  is  perpetuated  in  editions  of  export 
catalogs  year  after  year.  Illustrations  have  repeatedly  accom- 
panied text  absolutely  meaningless  because  the  article  portrayed 


208  EXPORT  MERCHANDISING 

was  not  one  with  which  foreign  buyers  were  famihar.  These 
iUustrations,  even  on  careful  study,  failed  to  reveal  the  purpose 
or  service  of  the  device.  The  text,  "Notice  the  convenient 
location  of  the  thumb  screw,"  or  some  similar  phrase  or  phrases, 
is  often  as  meaningless  to  the  reader  as  though  it  had  been  printed 
in  an  unknown  tongue. 

To  be  a  salesman,  the  catalog  must  create  desire.  Catalogs 
in  many  lines  fail  to  show  action  in  their  illustrations.  Even 
the  best  color  work  cannot  overcome  the  handicap  ''still  life" 
imposes  on  it.  Whether  the  product  be  sugar  or  dominoes, 
peanuts  or  pianos,  action  is  necessary  to  create  desire  to  all  but 
the  educated  taste.  The  very  makers  who  insist  that  their 
advertising  agencies  produce  interesting  action  drawings  for 
their  domestic  magazine  publicity  are  forgetful  of  fundamentals 
when  it  comes  to  their  own  export  catalog. 

A  Poor  Choice. — ^One  maker  of  men's  garters  bought  a  patent 
not  many  years  ago  which  he  rightly  felt  embodied  a  real  advance 
in  garter-making  and  comfort.  He  did  little  consumer  advertis- 
ing, investing  his  money  in  stirring  up  dealers.  As  he  was 
bringing  out  a  new  catalog  he  naturally  used  it  to  feature  the 
new  garter,  in  which  he  gave  six  full  pages  to  it.  One  was  almost 
solid  text — description  and  prices. — The  remaining  five  were 
colored  photographic  reproductions  of  the  different  shades  in 
which  it  was  made,  plus  one  ''X-ray"  showing  the  construction. 

While  this  resulted  in  some  casual  sales,  the  net  result  by  no 
means  justified  the  space  taken.  That  same  maker,  a  year  later, 
tried  the  idea  of  merely  listing  the  shades  and  giving  three 
pages  of  action  photographs  which  showed  the  consumer  angle 
of  comfort,  and  as  a  result  nearly  half  his  customers  ordered 
without  waiting  for  the  usual  salesman's  visit.  Very  few,  of 
course,  took  the  trouble  to  explain  why  they  ordered — if  they 
reasoned  it  out — but  several  score  asked  for  display  cards  and 
circulars  "showing  the  way  the  garter  works,"  showing  clearly 
their  real  appreciation  of  the  action  pictures. 

Portraying  the  Right  Selling  Point. — In  an  entirely  different 
line,  a  hardware  maker  learned  that  the  catch  line  "The  tool 
that  fits  your  hand"  did  not  begin  to  pull  until  in  his  catalog  he 
pictured  it  out  by  four  illustrations.  Similarly,  a  perfumery 
maker  with  a  new  disburser  found  his  best  appeal  to  be  an  "X- 
ray"  photograph  with  action  supplied  by  fingers,  combined  with 
an  entirely  different  series  showing  the  flow  at  different  angles. 


Fig.  12. — Paving  Havana  with  something  better  than  goud  intentions.  The 
Barber  Asphalt  Paving  Company  furnishes  asphalt  and  steam  roller.  In  the 
foreground  is  Stanley  H.  Rose,  Manager  of  Foreign  Sales. 


Fig.  1.3. — An  Armeo  Culvert  in  the  Malaj'  Peninsula.  The  Ainerieau 
Rolling  Mill  Company  exports  rust-resisting  products  to  far  corners  of  the 
round  world. 


THE  EXPORT  CATALOG  AS  A  SALESMAN  209 

This  supplies  only  a  start  in  making  the  catalog  a  sales- 
man. "Kill  complaints  before  the  dealer  believes  them," 
is  the  sage  advice  of  a  past  grand  master  of  merchandising. 
The  catalog  is  one  powerful  weapon  in  this  kind  of  a  preparedness 
campaign.  One,  two  or  even  four  pages  devoted  to  handling 
complaints  is  often  the  right  road  to  the  dealer's  heart.  No 
dealer  likes  a  complaint,  and  every  dealer  likes  to  back  up  his 
chosen  goods.  There  are  many  ways  to  aid  the  dealer  in  this. 
One  of  the  best  is  to  have  in  the  catalog  the  dealer  has  always 
at  hand  a  concise  description  of  probable  complaints,  their 
causes  and  the  right  road  to  satisfactory  answers.  It  is  not 
enough  to  have  this  in  the  catalog.  The  dealer  must  know  it  is 
there.  He  must  know  it,  first,  because  he  is  told  so  when  the 
catalog  is  sent,  and,  later,  because  he  cannot  dodge  seeing  it 
when  he  uses  the  catalog.  An  inconspicuous  location,  there- 
fore, will  mar  its  usefulness. 

The  "Question  Answerer." — The  third  point  in  the  catalog 
salesmanship  is  to  make  the  dealer  refer  to  it  not  only  to  order, 
but  also  to  answer  the  questions  he  would  ask  the  exporter's 
salesman  if  he  was  always  present  in  person.  Most  catalogs  fail 
to  point  out  consumer  arguments.  This  is  in  the  face  of  the 
strange  tendency  of  manufacturers  as  a  rule  to  try  to  sell  the  dealer 
with  consumer  selling  points. 

An  Indiana  exporting  manufacturer  has  spent  tens  of  thousands 
of  dollars  to  acquire  patents  and  ideas  to  make  the  use  of  the 
several  hundred  products  more  convenient  for  consumers'  use. 
But  he  does  not  advertise  direct  to  the  user  abroad.  His  catalog, 
by  its  brevity,  conceals  the  very  things  the  dealer  needs  to  put 
the  sale  across  the  counter.  In  his  export  catalog  is  used,  over 
and  over  again,  the  non-descriptive  phrase  "patent  adjustment." 
This  refers  to  parts  of  his  devices.  Because  he  knows  what  the 
patent  adjustment  accomplishes,  he  feels  that  it  "shows  on  its 
face  what  it's  for"  and  "can't  see  how  anyone  could  overlook 
it."  But  probably  two-thirds  of  users  abroad  never  know  the 
purpose  served  by  the  rather  clumsy-looking  attachments. 

An  office-to-oflice  test  within  ten  blocks  of  their  largest  branch 
house  abroad  showed  by  actual  count  that  this  manufacturer 
would  have  been  better  off  to  have  used  a  non-adjustable  device. 
In  six  cases  out  of  ten  the  ones  who  used  these  devices  most,  did 
not  know  of  the  adjustment.  Three  out  of  the  I'emaining  four 
did  not  know  its  full  possibilities  or  convenience. 

14 


210  EXPORT  MERCHANDISING 

When  User's  Preference  is  Known. — This  report  was  placed 
before  the  American  manufacturer.  He  was  astounded  and 
showed  an  elaborate  circular  that  was  sent  out  in  the  box  with 
each  device.  He  told  the  export  organization  that  made  the 
investigation  that  their  "salesmen  all  were  decidedly  in  favor 
of  the  patented  attachments."  Beyond  question,  some  few 
consumers  read  the  circulars  and  the  manufacturer's  salesforce 
used  the  argument.  The  fact  remained  that  the  big  bulk  of 
dealers  and  users  not  only  did  not  know  of  it  but  that  it  was  a 
handicap  overcome  only  by  the  inherent  worth  of  the  machine 
itself.  In  a  similar  line  where  the  maker  pounded  home  in  his 
catalog  the  strong  consumer  selling  points,  investigation  proved 
that  the  dealer's  clerks  talked  more  over  the  counter  of  the 
"patented  attachment"  than  on  durability  or  service,  and  that 
the  catalog's  insistence  paid  big  dividends. 

Increasing  the  Salesman's  Efficiency. — There  is  still  another 
angle  on  catalog  building  that  some  exporters  have  realized  for 
years,  yet  many  catalogs  show  on  their  face  as  unknown  to  the 
many.  This  is  its  use  in  increasing  the  salesman's  efficiency. 
There  is  nothing  like  cold  type  to  back  up  an  argument.  Every 
dealer  knows  that  what  a  reliable  firm  says  in  black  and  white, 
is  so.  This  does  not,  however,  extend  to  every  word  of  the 
salesman  for  the  very  same  house.  Based  on  this,  justified  or 
not,  the  wise  builder  will  make  his  finished  catalog  stand  squarely 
behind  his  salesman's  claims;  not  in  some  cases,  but  in  all. 

Many  American  enterprises  are  afraid  to  have  their  catalog 
be  more  than  an  illustrated  price  list,  and  one  to  be  used  by  the 
salesman  as  such.  But  the  salesman  who  can  say,  "This  will 
save  26  per  cent  over  the  usual  model,"  and  then,  by  use  of  his 
catalog,  can  continue,  "and  here's  my  firm's  proof  of  it  and  the 
reason  why, "  not  only  puts  selling  strength  in  his  argument  but 
also  is  able  to  continue  after  making  the  sale  of  that  item,  "You 
will  note  on  the  next  page  an  article  that  has  proved  itself  in 
Rio  and  Melbourne  an  exceptional  profit-maker.  See  how  the 
display  box  shows  up.  It's  on  the  counter  selling  while  your 
clerks  are  busy  waiting  on  some  one  else." 

The  moment  an  export  salesman  can  bring  the  export  catalog 
into  action  with  a  reason,  and  can  use  it  to  start  a  sale,  clinch  an 
argument  and  suggest  further  items,  it  is  a  real  selling  power. 
The  moment  it  is  merely  a  proof  of  price  or  packing,  it  drops 
back  to  comparative  insignificance  in  sales  making.     Still,  in 


THE  EXPORT  CATALOG  AS  A  SALESMAN  211 

even  such  a  role  the  catalog  must  not  fail.  It  nuist  contain  every 
detail  which  will  show  (in  connection  with  tliscount  quoted)  the 
exact  price  f.o.b.  factory  or  seaboard,  and  through  its  complete- 
ness show  the  dealer  or  salesman  knowing  thv  freight  rate,  the 
laid-down  cost  in  the  dealer's  store. 

TRANSLATION  WORK  IN  EXPORT  CATALOGS 

The  translation  of  the  export  catalog  is  a  most  important 
matter  and  should  begin  long  before  it  reaches  the  translator's 
hands.  It  is  a  knack,  but  one  which  can  be  acquired,  to  write 
English  which  translates  easily  and  naturally.  This  is  of  greatest 
importance  in  the  descriptive  text,  preface  and  where  instruc- 
tions for  ordering  are  concerned.  "When  in  doul)t — re-write" 
is  the  only  safe  rule,  judging  of  the  "  translatability  "  of  copy,  and 
a  rigid  enforcement  of  this  rule  is  doubly  important  when  it  refers 
to  catalogs,  booklets  and  circulars,  as  in  these,  errors,  even  in 
shades  of  meaning,  are  all  but  unpardonable. 

Common  Errors  to  Avoid. — It  is  particularly  important  to 
avoid  the  common  error  of  assuming  that  the  domestic  catalog 
furnishes  the  last  word  in  text  and  arrangement  of  text.  The 
good  export  catalog  exacts  far  more  of  the  export  manager  than 
the  handing  to  translators  of  the  body  of  the  domestic  catalog 
with  a  specially  written  preface.  The  products  to  be  sold  abroad, 
their  uses,  conveniences,  comforts  and  prices  are  the  real  bases. 
The  domestic  catalog  should  be  used  only  as  an  aid  to  the  builder 
of  the  export  catalog.  It  is  far  better  for  the  export  manager  and 
his  assistants  to  write  the  export  catalog  from  cover  to  cover  than 
to  attempt  to  use  the  domestic  catalog  as  text  merely  requiring 
revision. 

Preparing  the  Text  for  the  Translator. — The  average  domestic 
catalog  is  not  translatable  into  a  good  export  catalog.  The  first 
task  of  the  export  catalog-builder  is  to  prepare  text  that  when 
translated  will  convey  his  full  and  exact  ideas  in  a  form  which  will 
be  completely  understood  by  each  reader  abroad.  Idioms  and 
colloquialisms,  trade  nomenclature  correct  only  in  the  home 
market,  references  to  methods  and  practices  peculiar  to  the 
United  States  must  be  rigidly  eliminated.  The  text  supplied  to 
the  translator  must  eschew  all  doubtful  or  double  meanings. 
It  must  be  based  squarely  on  an  adequate  comprehension  of 
the  ultimate  reader  of  the  catalog  and  upon  the  verj^  knowledge 
possessed  by  the  ultimate  reader  of  the  catalog. 


212  EXPORT  MERCHANDTSING 

The  conditions  which  will  be  found  in  tlie  countries  to  which 
the  catalog  will  go  must  be  determined.  This  frequently  calls 
for  exacting  research.  The  equivalents  of  domestic  trade  terms 
and  technical  phrases  must  be  sought  out  before  translation  and 
not  left  to  the  translator  except  in  most  unusual  cases.  The 
form  of  expression  which  will  be  most  acceptable  to  importers 
abroad  must  be  ascertained.  Many  otherwise  excellent  Ameri- 
can export  catalogs  literally  offend  importers  abroad  because  of 
the  form  in  which  claims  of  superiority  are  made,  emphasized  and 
reiterated.  It  is  on  this  particular  point  that  the  service  of  the 
linguist  should  be  enlisted  before  the  text  is  commenced. 

What  the  Translator  Must  Know. — In  exactly  the  same  man- 
ner, the  translator  should  be  brought  to  know  the  products  which 
the  export  catalog  portrays.  Not  only  the  actual  products  and 
their  constituent  parts  but  also  the  uses  of  the  products 
must  be  familiarized  before  the  translator  is  equipped  to  make  the 
export  catalog  into  a  salesman.  The  translator  must  be  able  to 
visualize  the  product  in  use,  not  only  as  used  in  the  domestic 
market  but  also  as  it  will  be  used  in  foreign  markets.  He  must 
know  the  arguments  by  which  it  is  sold  at  home  and  abroad, 
and  its  appeal  to  the  consumer.  It  is  well  to  demonstrate 
complicated  machinery  before  the  eyes  of  the  translator. 

The  export  executive  must  share  most  carefully  with  the 
translator  fundamental  knowledge  of  what  is  to  l3e  sold  and 
of  the  conditions  under  which  it  is  to  be  sold.  The  United 
States,  as  a  nation,  is  accustomed  to  the  use  of  many  products 
which  are  unfamiliar  in  the  daily  life  of  many  nations.  A 
situation  is  thus  brought  into  being  that  demands  a  most  careful 
study  to  determine  the  exact  wordings  which  will  best  present 
the  idea  of  use.  It  calls  for  new  words  in  other  languages  to 
designate  exactly  the  purposes  which  the  product  is  designed  to 
accomplish  and  to  identify  the  elements  which  together  result 
in  this  accomplishment.  While  the  creation  of  new  words  is 
naturally  to  be  avoided  wherever  possible,  it  is  decidedly  prefer- 
able to  coin  a  word  and  explain  its  exact  meaning,  than  to  accept 
an  existing  word  or  phrase  which  in  its  connotations  is  misleading. 

Checking  the  Original  Copy. — It  will  be  found  well  worth  while 
to  read  the  English  text  most  carefully  before  sending  it  to  the 
translator.  From  notes  made  in  this  reading  the  catalog  should 
be  accompanied  by  a  many-paged  letter  based  on  the  idea  that 
even  the  smallest  chance  for  incomplete  understanding  should  be 


THE  EXPORT  CATALOG  AH  A  SALESMAN  213 

eliminated  at  the  outset.  In  an  examination  of  many  dozen 
carefully  prepared  catalogs  the  one  greatest  cause  for  criticism  is, 
that  semi-meaningless  phrases  in  description  of  products  are 
commonly  found.  This  is  due,  beyond  doubt,  to  the  fact  that 
the  translator  was  not  certain  of  his  ground  and  "played  safe" 
by  a  rigidly  literal  translation  of  the  English  words. 

It  is  hardly  fair  to  call  all  of  these  excellent  catalogs  faulty. 
Many  are  fine  examples  of  selling  literature.  These  minute 
flaws  are  mentioned  as  a  warning  to  the  less-experienced  so  that 
they  can  see  the  necessary  extent  of  pre-translation  work.  One 
of  the  most  brilliant  export  managers  in  this  or  any  country 
admitted  that  he  had  been  responsible  for  eighty-two  catalogs  and 
that  not  one  was  perfect  in  description  and  detail.  If  all  were 
equally  frank  it  would  be  admitted  that  best  efforts  have  fallen 
short  of  absolute  accuracy.  But  that  supplies  no  reason  for  not 
working  toward  the  ideal. 

The  manifest  advantages  of  the  loose-leaf  type  of  export 
catalog  demand  the  attention  of  each  export  executive.  Not 
only  does  the  loose-leaf  method  of  binding  permit  of  addition 
of  new  pages  describing  added  products  but  also  it  permits 
the  removal  of  pages  describing  lines  which  have  been  dropped 
or  altered.  A  further  advantage  of  the  loose-leaf  catalog  lies  in 
the  forceful  manner  in  which  changes  and  additions  are  brought 
to  the  attention  of  each  customer.  From  the  sales  angle  the 
loose-leaf  export  catalog  affords  frequent  opportunities  for  sales 
letters  in  connection  with  the  sending  of  pages. 

The  principle  which  insists  that  no  artificial  obstacle  be 
permitted  to  remain  in  the  road  between  seller  and  buyer  applies 
definitely  to  the  export  catalog.  The  export  salesman  must  be 
able  to  present  his  arguments  in  the  proper  language.  The 
export  catalog  should  be  printed  in  the  correct  commercial 
languages  of  the  markets  in  which  it  seeks  orders. 

HOW  TO  CHECK  AN  EXPORT  CATALOG 

Accuracy  in  every  detail  should  be  the  goal  of  every  builder 
of  an  export  catalog.  Tliis  can  be  secured  onl}^  by  most  exacting 
care  in  the  preparation  of  the  text,  illustrations  and  tabulations, 
plus  a  scientific  checking  of  the  printed  proof  after  translation. 
The  method  given  below  is  the  system  employed  by  a  veteran 
exporter.     It  came  into  being  only  after  so  many  trivial  and 


214  KXl'ORT  MKUCIIANDISING 

iiKijor    (M'i'oi's  had  inarrtMl  his  export  catalog  that  the  need  of  a 
definite  set  of  I'ules  for  checking  was  made  entirely  apparent. 

Eighteen  Divisions  of  Checking 

Check  I 
Write  and  check,  letter  by  letter,  the  cover  pages  first. 

Check  II 

Prepare,  divide  and  check  for  text  and  ccjlor-break  up  the  "  Introduction," 
"To  the  Trade"  or  "Preface." 

Check  III 

Check  Talile  of  Weights  and  Measure  men  Is  by  common  sense  as  well  as 
original  draft.     This  is  particularly  important. 

Check  IV 

Check  "Tal)le  of  Contents"  or  "Index"  from  and  to  text.  When  this 
is  done  make  new  index  and  compare  it  with  checked  copy  before  deeming 
check  complete. 

Check  V 

Assuming  that  text  in  English  is  complete  and  entirely  legible,  check 
catalog  numbers. 

Check  VI 

Check  description  of  each  line  and  size 
(a)  By  common  sense 
{h)   Against  catalog  number 

(c)  For  every  detail,  not  only  for  accuracy  but  also  for  completeness  from 
a  selling  standpoint. 

Check  VII 

Check  manner  of  packing  of  each  item,  for  example:  "1  gross  to  the 
case,"  "one  hundred  meters  per  coil." 

Check  VIII 

Check  quantity  unit  used  in  connection  with  price,  such  as  "Gallons," 
"Gross,"  "Dozen,"  "Yards." 

Check  IX 

Check  list  prices  on  each  item. 

Check  X 

Check  descriptive  text,  used  as  headings  and  sub-headings. 

Check  XI 
Check  page  numbers. 


THE  EXPORT  CATALOG  AS  A  SALESMAN  215 

Check  XII 

Check  color-break  up  (i.e.  the  words  and  figures  to  go  in  contrast  color). 

Check  XIII 

If  discount  sheet  is  separate  from  catalog,  check  this  by  making  up  new 
discount  sheet  direct  from  catalog  based  only  on  memory  and  common  sense, 
and  check  this  against  original  draft. 

Check  XIV 
Check  running  titles. 

Check  XV 

Read  catalog  from  start  to  finish,  word  by  word,  as  if  considering  accept- 
ing the  agency  for  an  unknown  product  and  that  the  catalog  was  the 
only  guide. 

Check  XVI 

Repeat  all  checks  possible  on  receipt  of  translated  copy.  Check  illus- 
trations : 

(a)  To  see  that  lines  portrayed  are  listed 

(6)  To  see  that  catalog  numbers,  descriptions  and  packings  are  correct. 

Check  XVII 
Check  catalog  for  uniformity  of  phrasing  in  descriptions. 

Check  XVIII 
Check  catalog  for  punctuation. 

In  connection  with  checking  translated  copy,  it  has  been  found 
highly  advisable  to  have  a  second  person  read  the  English  while 
the  export  executive  held  the  text  in  foreign  language.  By 
this  stage  the  catalog  has  become  more  or  less  stale  news  and 
almost  known  by  heart.  The  to-be-expected  perfunctory 
reading  the  mind  is  apt  to  give  at  a  critical  stage,  is  almost 
worthless. 

Do  not  spoil  all  previous  efforts  toward  good  catalog  making 
by  poor  checking.  The  export  manager  should  accept  active 
participation  in  the  checking  of  the  export  catalog  as  most 
important,  unless  someone  else  knows  more  of  the  catalog  and 
its  correct  contents.  When  in  doubt,  kill  that  doubt  before 
proceeding. 

The  Finer  Points  of  Export  Copy. — So  far,  with  few  exceptions, 
elementary  points  have  been  described.  There  are  finer  points 
which  are  difficult  to  explain  but  which  mean  much  to  the 
selling  power  of  the  catalog.  To  ])e  concrete,  the  selling  argu- 
ments employed  must  be  what  Robert  Louis  Stevenson  would 


210  EXPORT  MERCHANDISING 

have  called  the  "inevitable"  ones.  It  is  a  lazy  man's  way  to 
use  phrases  from  the  domestic  catalogs  merely  because  they 
are  handy.  It  is  fool's  pride  which  abandons  an  alluring  descrip- 
tion in  the  domestic  catalog  for  an  inferior  one  of  purely  export 
making.  The  vital  point  is  to  know,  not  guess,  what  the 
export  catalog  must  contain  so  that  the  buyer  in  a  foreign 
market  may  order  to  his  right  buying  capacity.  If  the  important 
point  to  make  is  that  a  machine  has  a  thumb  screw  on  the  left- 
hand  side  instead  of  on  the  right-hand  side,  emphasize  it.  If, 
however,  that  point  is  only  valuable  here  at  home  and  to  the 
minor  if  only  advantage  over  the  non-exported  "Jones"  machine, 
it  should  be  omitted.  Often  it  is  wise  to  keep  to  fundamentals 
and  to  stress  to  the  buyer  abroad  only  that  a  product  saves  time, 
temper  and  money,  and  will  sell  on  sight  for  those  reasons. 

Each  item  a  manufacturer  produces  should  be  analyzed 
to  determine  its  best  export  selling  points.  If  a  patented  device 
has  no  rival  abroad  the  sales  argument  should  be  based  on  its 
basic  advantages,  even  though  domestic  competitors  have  driven 
the  exporter  to  feature  trivialities  in  the  home  market.  The 
export  catalog  should  be  straightforward.  It  should  make  it 
easy  for  the  exporter's  co-partner — the  foreign  dealer — to  order. 

The  export  catalog  must  be  a  salesman.  In  its  preparation 
there  should  be  a  mental  picture  of  the  catalog  entering  the 
establishment  of  the  foreign  buyer,  presenting  a  quotation  letter 
as  its  letter  of  introduction  and  then  answering  every  question 
natural  in  the  circumstances. 

Test  each  export  catalog  on  this  basis.  If  a  sale  results  in  the 
right  per  cent  of  cases,  the  catalog  proves  itself  a  salesman. 


CHAPTER  XX 
THE  PLACE  OF  THE  HOUSE  ORGAN  IN  EXPORT  SELLING 

"Beyond  question,  the  house  organ,  rightly  conducted,  is  one  of 
the  most  efficient  and  economical  of  advertising  mediums." 

— Arthur  T.  Garrett. 

Function  of  the  House  Organ.  Fundamentals  of  Editorial  Policy.  How 
to  Secure  Reader  Interest.  Its  Use  in  Creating  Good-will.  First  Steps  in 
Preparation  of  Copy.  Mailing  Lists.  Articles  that  Are  A ppreciated  by  Import- 
ers Abroad.  Contributions  from  Outside  the  Enterprise.  Features  Which 
Insure  the  Preservation  of  Each  Issue  by  the  Importer.  Photographic  Repro- 
ductions of  Windoiv  Displays  as  Illustrations.  Method  of  Testing  Reader 
Attention.     Examples  of  Successful  and  Uns  uccessful  Export  Ho  use  Magazines. 

There  is  no  more  commonly  neglected  sales  weapon  in  export 
trade  than  the  house  organ  or  house  magazine. 

The  export  salesman  must  speak  largely  about  the  things  of 
which  he  wishes  to  speak.  The  export  sales  letter  must,  perforce, 
devote  itself  largely  to  its  selling  message.  The  house  magazine 
of  the  exporter  may  and  should  be  given  over  almost  in  its 
entirety  to  those  topics  which  are  of  immediate  and  intense 
interest  to  the  importer  abroad. 

It  is  true  that  this  conception  of  the  house  magazine  is  not  a 
common  conception.  While  there  are  all  too  few  house  maga- 
zines used  in  export  selling,  it  is  entirely  fair  to  class  the  great 
majority  of  these  as  supplements  to  the  exporter's  catalog. 

EDITORIAL  FUNDAMENTALS 

So  seldom  is  it  that  the  proper  conception  prevails  that  it  will 
be  found  almost  universally  that  from  cover  to  cover  the  house 
magazine  is  filled  with  direct  sales  appeal — something  better 
left,  if  not  entirely  to  the  salesman  and  to  the  sales  letter,  at 
least  to  other  forms  of  the  printed  word. 

The  first  fundamental  of  a  magazine  is  that  it  should  be  edited 
for  the  reader  and  not  for  the  editor.  There  are  but  few  existing 
proofs  in  the  field  of  the  house  magazine  sent  abroad  that  this 
statement  is  correct,  unless  we  include  the  many  negative  proofs 
of  what  the  house  magazine  should  not  be. 

217 


218  EXPORT  MERCHANDISING 

It  is  an  easy  matter  to  fill  the  house  magazine  with  glowing 
articles  describing  in  flowery  adjectives  the  products  which  the 
exporter  wishes  to  sell.  It  is  an  easy  matter  to  illustrate  the 
house  magazine  with  existing  electrotypes  of  staples  and  special- 
ties. It  is  a  relief  for  the  export  manager  to  have  plenty  of 
white  space  to  fill  with  printed  words  or  praise  for  products  and 
policies.  There  is  no  one  place  which  so  fully  and  completely 
can  satisfy  the  export  manager  in  his  portrayal  of  the  merits  of 
his  lines. 

Building  Up  Goodwill. — Fundamentally,  the  object  of  the 
house  organ  in  export  trade  is  to  increase  profits  by  building  up 
goodwill,  and  not  by  crudely  inviting  purchases.  The  house 
magazine,  to  be  truly  effective,  must,  therefore,  create  good- 
will first  of  all  by  filling  an  existing  need  of  the  importer  abroad. 
It  must  bring  to  the  importer  something  which  will  interest  him, 
something  that,  without  the  house  organ,  he  would  miss  and,  so 
far  as  it  is  possible,  actually  aid  the  importer  in  making  profits 
which  would  otherwise  be  unobtainable. 

The  first  step  in  the  correct  editing  of  the  house  magazine 
should  be  to  ascertain  the  preferences  and  the  needs  of  those 
who  are  to  read  it.  It  is  unwise  and  unnecessary  to  permit  this 
to  be  a  matter  of  chance.  Investigation  should  precede  and  not 
follow  the  issuance  of  a  house  magazine,  and  from  the  start 
definite  policies  should  be  worked  out.  In  passing,  it  is  well  to 
say  that  it  is  far  easier  to  map  out  editorial  policies  than  to  live 
up  to  them  in  the  constant  temptation  "to  put  a  selling  punch" 
into  each  article. 

The  Mailing  List. — The  first  step  in  building  up  the  house 
magazine  is  to  construct  its  mailing  list.  In  the  great  majority 
of  cases  this  can  well  include  the  better  class  of  prospective 
customers  as  well  as  existing  customers.  This  should  follow 
a  diagnosis  of  the  personnel  of  the  mailing  list  and  a  careful 
study  of  its  crying  needs.  It  should  be  remembered  always 
that  the  test  of  an  article  or  of  an  illustration  should  be  its 
adaptability  to  the  reader.  Only  by  placing  himself  squarely 
in  the  shoes  of  his  readers  will  the  editor  of  the  house  magazine 
even  approximate  the  right  decision. 

LAUNCHING  AN  EXPORT  HOUSE  MAGAZINE 

From  these  generalities  it  is  well  to  ascend  to  concrete  facts. 
For  an  easily  comprehended  example,  the  inauguration  of  the 


THE  HOUSE  ORGAN  IN  EXPORT  SELLING  219 

house  organ  to  further  the  profits  of  the  manufacturing  exporter 
of  toilet  preparations  will  be  used.  It  can  be  assumed  that  from 
every  available  source  a  mailing  list  has  been  built  containing 
the  names  of  several  thousand  dealers.  Consideration  will  be 
confined  to  the  Spanish  edition  of  this  particular  house  organ. 
The  first  issue  can  well  be  devoted  to  an  introduction  of  its 
publishers  to  its  readers  and  be  largely  proofs  of  the  responsibility 
of  the  manufacturer  and  his  desirability  as  a  source  of  supply. 
Then  comes  the  real  problem — the  year-in  and  year-out  problem 
of  supplying  to  the  reader  exactly  what  he  wants  and  needs  to  read. 

It  is  fair  to  assume  that  the  dealer  is  interested  in  his  business. 
He  must  be,  if  he  is  a  desirable  customer  and  one  whose  goodwill 
is  worth  cultivating.  It  is,  therefore,  fair  to  assume  (and  experi- 
ence has  proved  the  assumption  to  be  sound)  that  he  will  read 
with  interest  and  appreciation  articles  which  will  enable  him 
better  to  stock  his  store  and  better  to  display  his  stock,  provided 
these  refer  only  incidentally  to  the  products  of  the  enterprise 
publishing  the  house  magazine. 

Solving  the  Dealer's  Problems. — The  interest  of  the  dealer 
can  be  secured  and  held,  month  after  month,  by  articles  which 
solve  problems  which  perplex  him.  The  dealer  welcomes  invari- 
ably articles  which  will  enable  him  to  price  his  goods  correct!}^; 
systems  which  will  simplify  his  accounting;  diagrams  and  photo- 
graphs with  text  which  lead  to  better  store  arrangement,  and 
unbiased  portrayals  of  the  various  types  of  store  fixtures. 

The  American  manufacturer  can  count  upon  the  careful  read- 
ing of  articles  which  deal  with  successful  methods  employed  in 
handling  complaints,  articles  which  show  delivery  costs  in  the 
United  States  and  elsewhere  and  hints  which  will  better  his 
collection  record  and  safeguard  his  granting  of  credits.  Above 
all  things,  a  sympathetic  reading  is  insured  to  all  articles  which 
point  out  definite  ways  to  increase  sales. 

With  these  specific  texts  or  concrete  topics  there  should  be 
an  admixture  of  articles  by  men  whose  fame  is  known  in  every 
Spanish-speaking  country,  perhaps  once  or  twice  a  year  a  bit 
of  original  verse,  light  and  pleasing  in  nature.  It  is  entirely 
possible  for  the  correctly  edited  house  magazine  to  secure  as 
contributors  men  of  international  importance  working  for  the 
better  understanding  between  the  American  republics — men 
who  have  messages  which  will  be  read,  appreciated  and  remem- 
bered by  every  customer,  actual  and  prospective. 


220  EXPORT  MERCHANDISING 

Insuring  Retention  of  the  Magazine. — Then,  too,  there  is 
another  feature  which  should  be  present  in  every  issue  of  the 
house  magazine  distributed  abroad.  This  must  take  the  form 
of  information  so  vahiable  that  in  itself  it  warrants  the  reader  in 
preserving  the  magazine  for  future  use.  The  importance  of 
this  is  easily  seen,  easily  forgotten  and  most  difficult  to  secure 
for  every  issue. 

In  this  class  fall  tables  of  weights  and  measures  as  used  locally 
and  internationally,  tables  of  metric  equivalents,  glossaries  of 
trade  terms,  hsts  of  abbreviations  used  in  international  trade, 
definitions  of  forms  and  phrases  used  in  foreign  commerce, 
existing  parcel  post  facilities  to  and  from  the  United  States  as 
arranged  with  each  American  republic  and  with  each  Spanish- 
speaking  nation. 

Wise  Choice  of  Illustrations. — Illustrations  should  be  chosen 
not  so  much  with  the  idea  of  economically  using  existing  electros, 
but  to  secure  the  most  interesting  illustrations  from  the  stand- 
point of  the  merchant  abroad.  Much  as  the  export  manager 
might  like  to  see  an  X-ray  view  of  a  pencil  sharpener,  it  is 
entirely  probable  that  his  reader  would  infinitely  prefer  a  sunset 
view  of  the  skyline  of  lower  Manhattan — whose  skyscrapers 
have  such  a  compelling  appeal  to  the  Latin. 

It  is  entirely  fair  at  this  stage  for  the  reader  to  ask  in  no 
uncertain  terms  what  space  is  to  be  given  to  definite  goodwill 
building.  The  reader  might  well  criticize  the  preceding  program 
as  altruistic  and  ineffective  in  the  building  of  goodwill.  If  the 
great  majority  of  the  text  and  illustrations  are  devoted  to  topics 
remotely  if  at  all  connected  with  the  manufacturers'  products, 
the  reader  will  attach  tremendous  significance  to  the  fragment 
which  does  relate  to  the  enterprise  which  publishes  the  house 
magazine. 

Proving  World-wide  Distribution. — One  of  the  functions  of 
the  house  magazine  is  to  prove  widespread  dealer  and  consumer 
acceptance  of  its  products  without  stridently  proclaiming  "Our 
goods  are  sold  everywhere  in  the  world."  By  deft  use  of  photo- 
graphs showing  window  display  from  Iceland  to  South  Africa, 
by  photographs  showing  universal  methods  of  transportation  in 
many  countries,  no  blare  of  printed  words  is  needed  to  convey 
the  essential  idea  hy  proof.  Similarly,  the  worth  of  a  product 
can  be  skilfully  suggestive  in  an  article  showing  the  correct  uses 
and  probable  abuses  of  a  product,  written  in  such  a  helpful  vein 


THE  HOUSE  ORGAN  IN  EXPORT  SELLING  221 

that  it  will  inevitably  help  the  merchant  in  his  daily  contact 
with  his  own  customers.  In  reading  such  an  article  the  dealer 
will  instinctively  come  to  recognize  that  the  product  is  worthy 
and  that  complaints  and  claims  are  the  result  of  incorrect  use. 
Science  and  sales  artistry  should  be  employed,  so  that  in 
bringing  to  the  attention  of  the  dealer  new  and  novel  additions 
to  existing  lines  he  will  think  at  once  of  the  added  profit  these 
will  make  for  him,  and  not  buckle  on  his  armor  as  he  will  fre- 
quently do  in  direct  sales  attack. 

TWO  ILLUMINATING  EXAMPLES 

The  correct  export  use  of  the  house  magazine  can  be  shown 
clearly  by  the  citation  of  two  thinly  disguised  cases  of  what  a 
house  organ  must  and  what  it  cannot  be,  if  it  is  to  be  a  worthy 
sales  weapon. 

The  Blank  Manufacturing  Co.  of  Toledo  decided  to  increase 
their  foreign  sales  by  50  per  cent.  They  were  willing  to  invest 
heavily  in  order  to  wrest  export  sales  leadership  from  an  English 
rival.  A  house  magazine,  to  be  sent  every  month  to  their 
customers  and  selected  prospective  customers  abroad,  was  pro- 
posed by  their  advertising  manager.  The  export  sales  depart- 
ment was  in  hearty  agreement  with  this  plan.  An  appropriation 
of  $10,000  per  year  was  set  aside  for  an  export  house  organ.  The 
first  issue  was  a  model.  Each  department  head,  and  even  mem- 
bers of  the  Board  of  Directors,  contributed  most  interesting  copy 
out  of  their  wealth  of  experience.  New  lines  (brought  out  since 
the  annual  export  catalog  was  issued)  were  attractively  displayed 
and,  as  a  result,  a  thoroughly  readable  and  well-balanced  maga- 
zine was  produced. 

The  second  number  was  issued  on  time  and  was  of  almost  as 
high  a  standard.  Excellent  material  found  space,  which  had 
been  omitted  from  the  initial  number  by  sheer  lack  of  room. 
Departments  which  had  little  interest  at  the  start,  once  aroused 
by  the  success  of  the  initial  number,  came  to  the  front  with 
human-interest  articles  and  notes  which  made  editing  a  pleasure, 
and  the  third  and  fourth  issues  easy  to  prepare. 

The  Danger  Stage. — Then  the  decline  in  effectiveness  com- 
menced. •  The  novelty  of  the  export  house  magazine  was  a  thing 
of  the  past.  The  one  good  idea  each  man  is  supposed  to  have, 
had  been  contributed  by  the  inside  staff.     The  foreign  traveling 


222  EXPORT  MERCHANDISING 

sales  force  clamored  for  recognition.  "Tell  importers  about 
the  goods,"  it  unanimously  insisted.  "Make  it  easy  for  impor- 
ters to  order.  Run  list  prices  and  catalog  numbers  of  some  of  our 
specialties.  Use  testimonials  from  our  customers  in  every 
issue." 

With  this  use  of  material  and  a  few  photographs  of  window 
displays,  the  first  half-year  passed.  Then  the  President  con- 
ceived the  idea  of  an  issue  devoted  to  the  growth  of  the  Company. 
He  indicated  enough  angles  to  take  up  the  entire  sixteen  pages, 
and  approved  the  expense  of  new  photographs  and  half-tones 
without  hesitation.  The  house  organ  collapsed  after  the  next 
four  issues.  Department  heads  had  to  be  cornered  to  contribute. 
The  advertising  manager  was  pressed  for  time  on  account  of  the 
coming  Fall  campaign.  The  export  manager  had  written  him- 
self out. 

An  Inglorious  Ending. — At  this  stage  the  export  salesmen 
began  to  criticize  the  magazine  adversely.  They  were  only  half 
appeased  when  the  distracted  advertising  manager  ran  a  monthly 
series,  "Star  Blank,  Export  Salesman,"  with  full-page  photo- 
graphs and  pages  of  laudatory  text.  A  page  of  hastily  clipped 
humor  crept  in.  The  size  of  the  house  organ  was  cut  to  twelve 
pages.  Photographs  of  domestic  window  displays  and  sales  copy 
on  oldtime  staples  were  used  to  fill  up  the  issues.  One  issue  came 
out  three  weeks  late.  Finally,  with  the  consent  of  all,  the 
magazine  so  brilliantly  started  was  allowed  to  be  added  to  the 
list  of  "direct  export  advertising"  failures. 

A  Successful  House  Organ. — The  other  side  of  the  picture 
points  the  moral  of  this  fiasco.  To  make  the  moral  effective 
there  has  been  selected  the  history  of  a  house  magazine  the  career 
of  which  export  executives  have  followed  with  pleasure  during 
the  past  five  years. 

The  particular  magazine's  existence  is  due  to  the  untiring 
interest  of  the  "assistant  to  the  general  manager"  of  one  of  our 
large  Pennsylvania  corporations.  In  the  face  of  opposition  due 
to  the  fact  that  the  house  organ  idea  had  been  tried  in  the  domes- 
tic field  before  by  his  House  and  its  competitors,  and  abandoned, 
he  persisted  that  it  was  the  only  logical  way  to  fill  up  the  gap  left 
by  the  absence  of  a  good  export  trade  paper  in  its  particular 
field.  If  he  had  been  of  less  authority,  or  had  not  had  a  record  of 
getting  back  two  dollars  for  each  dollar  he  spent,  his  export 
house  organ  idea  would  never  have  been  put  into  execution.     The 


THE  HOUSE  ORGAN  IN  EXPORT  SELLING  223 

export  sales  and  advertising  departments  were  at  first  openly 
opposed  to  any  resuscitation  of  a  plan  which  represented  the 
equivalent  of  several  yearly  export  contracts  for  missionary 
salesmen  to  aid  in  creating  consumer  demand  abroad. 

Foundation  Building. — The  first  step  was  to  secure  through 
trade  sources  of  information  a  list  of  export  house  magazines 
issued  in  the  United  States,  and  from  his  foreign  branch  houses 
copies  of  the  comparatively  few  European  examples.  With  over 
one  hundred  house  magazines  to  study,  his  task  was  only  started. 
Whereas  he  had  no  real  editorial  experience  and  was  confessedly  a 
novice  in  printing  and  papers,  his  next  step  was  typical  of  his 
methods,  as  it  included  the  sending  of  a  sample  set  of  his  com- 
pany's products  to  each  export  house  organ  editor,  with  an 
appeal  for  information  and  suggestions. 

When  these  letters  and  sample  copies  had  been  digested  he 
made  a  trip  to  New  York  to  discuss  his  problems  with  export 
organizations  and  publishers  of  export  journals.  On  his  return 
he  secured  a  conference  which  included  the  entire  export  depart- 
ment, sales  department,  advertising  department,  general  manager 
and  president.  He  plunged  into  the  middle  of  the  subject  with 
his  statement  that  an  export  house  magazine  could  be  made  a 
highly  effective  adjunct  to  their  existing  foreign  merchandising 
efforts,  but  that  it  must  not  be  the  tool  of  any  one  department  or 
subject  to  passing  whims  of  even  the  heads  of  the  business. 

He  insisted  that  a  house  organ  must  be  a  inacjazine,  not  a 
booklet,  catalog  or  collection  of  circulars.  As  such,  it  must  have 
just  as  distinct  an  editorial  policy  as  any  general  magazine,  must 
live  or  die  with  the  interest  of  its  reader  and  must  be  edited  to 
suit  the  man  on  the  other  end. 

The  Editorial  Policy. — This  creed  has  remained  as  a  guiding 
star.  The  house  magazine  editor  was  selected  from  the  adver- 
tising department,  with  the  originator  as  editor-in-chief  and  the 
export  manager  as  his  associate.  "  Find  out  what  our  agents  and 
dealers  abroad  want  us  to  publish,"  was  the  battle-cry. 

One  issue,  for  example,  did  not  contain  a  single  reference  to  the 
company's  products,  but  did  give  from  every  valuable  angle  the 
opinion  of  the  leaders  of  the  industry  on  a  certain  burning  ques- 
tion caused  by  the  War.  In  this  symposium  issue,  even  one 
close  to  the  head  of  our  Government  did  not  hesitate  to  contrib- 
ute. Paid  articles  by  a  college  professor  and  a  well-known 
scientist;  a  short,  crisp  comment  by  the  owner  of  a  line  of  ocean 


224  EXPORT  MERCHANDISING 

steamships,  and  fifty-word  suggestions  by  officials  of  an  inter- 
national organization,  made  the  issue  noteworthy  in  the  annals  of 
export  house  organ  history.  Special  issues  were  barred  by  an 
edict.  But  tliis  one  issue  capitalized  an  extraordinary  condition. 
In  general,  the  editorial  policy  included  the  publishing  in  each 
issue  of  an  article  by  some  outsider  on  a  topic  of  timely  interest  to 
the  industry.  This  series  was  featured.  It  grew  to  be  regarded 
as  an  honor  to  be  the  monthly  contributor  of  this  leading  article 
because  of  the  calibre  of  men  and  treatment  of  subjects  in  the 
early  issues. 

A  Popular  Series. — The  most  expensive  regular  feature  was  a 
series  on  store  arrangement  (which  ran  through  six  issues),  written 
by  a  former  fixture  sales  manager  who  spent  several  weeks  in 
export  investigation  before  his  liberally  illustrated  series  was 
prepared.  It  proved  so  effective  with  importers  overseas  that 
they  all  but  defeated  the  idea  of  making  the  series  prove  doubly 
the  wisdom  of  saving  the  house  magazine,  by  their  insistence  on 
a  reprint  in  booklet  form. 

Typographically,  this  house  organ  is  distinctive.  It  has  a 
border  designed  to  bring  in  rather  than  bring  out  the  lines  made; 
the  stock  used  permits  effective  use  of  tint  blocks;  the  type  is 
used  solely  for  the  house  magazine  and  clearness  of  outline 
insisted  on  absolutely. 

In  each  issue  the  real  meat  has  come  in  the  articles — "Trade 
Abuses  and  the  Dealer's  Part  in  Them;"  "The  Returned  Goods 
Evil  and  the  Reason  for  our  Policy;"  "  Collection  Systems  and  the 
Danger  of  Bad  Debts;"  "Correct  Uses  and  Common  Abuses  of 

;"  and  a  short,  well-displayed  half -page  or  more  given  over  to 

a  new  line,  a  patented  feature  or  a  change  in  packing. 

Testing  Reader  Interest. — In  order  to  test  out  this  export 
house  organ,  the  editor-in-chief  inserted  in  it  a  certificate  calling 
for  an  elaborate  booklet,  using  this  before  the  booklet  was  given 
any  other  publicity.  While  this  certificate  was  inserted  between 
the  center  pages  and  no  reference  made  to  it,  requests  from 
readers  in  every  country  on  the  mailing  list  resulted. 

As  a  further  test,  one  new  line  not  before  announced  to  the 
export  salesmen  was  featured  in  the  house  organ.  Scores  of 
orders  were  booked  and  hundreds  of  requests  for  samples  and 
literature  received  as  a  result  of  a  single  page  notice. 

There  have  been  few  "professional"  articles  in  late  years, 
because  the  staff  has  learned  from  experts  how  to  treat  an  idea — 
and  the  editor-in-chief  has  ideas  to  assign  to  all. 


THE  HOUSE  ORGAN  IN  EXPORT  SELLING  225 

THE  EXPORT  HOUSE  MAGAZINE  THAT  ACCEPTS  OUTSIDE 
ADVERTISING 

A  mid-western  manufacturer  of  excavating  machinery  decided 
several  years  ago  to  publish  an  export  house  organ.  He  engaged 
an  experienced  foreign  language  newspaper  man  to  edit  it. 
The  name  of  the  enterprise  that  was  backing  the  house  organ 
appeared  nowhere  except  on  the  advertising  pages,  where  it 
paid  for  its  space  at  the  same  rate  as  other  advertisers  did. 
The  house  organ  allowed  manufacturers  of  non-competitive 
machinery  to  advertise  on  its  pages.  Every  issue  contained 
photographs  of  large  construction  projects  in  connection  with 
which  the  excavating  machinery  in  which  the  magazine  was 
interested  was  being  used.  Every  issue  contained  a  human- 
interest  article  about  some  foreman  abroad  who  chanced  to  be 
using  this  machinery,  and  personal  notes  on  contractors  who  had 
been  awarded  contracts  or  foremen  who  had  gone  to  work  on 
certain  jobs.  It  is  not  surprising  that  the  editor  of  this  magazine 
received  letters  from  many  contractors  in  foreign  countries 
fully  describing  proposals  which  they  had  been  awarded,  asking 
the  editor  to  recommend  the  equipment  that,  in  his  opinion,  was 
best  adapted  to  the  work.  One  inquiry  of  this  type,  handled  in 
the  most  conscientious  way  and  with  the  idea  of  giving  fullest 
assistance  to  the  contractor,  is  worth  to  the  house  in  actual  sales 
the  cost  of  editing  and  publishing  the  magazine  for  many  months, 
if  not  years. 

Supplementing  the  Export  Salesman. — The  export  house  organ 
should  say  the  things  a  salesman  cannot  say.  It  should  be  worth 
reading  to  every  dealer  in  its  line  for  its  value  apart  from  informa- 
tion about  its  publisher's  lines  and,  above  all  things,  it  should 
receive  as  careful  thought  as  the  most  complicated  of  selling 
problems  and  the  care  of  the  most  delicate  of  selling  weapons. 

These  suggestions  relating  to  the  safe  and  sane  way  to  introduce 
to  the  attention  of  the  importer  the  manufacturer's  own  products, 
should  not  lead  actual  and  potential  editors  of  house  magazines 
to  assume  that  their  ingenuity  should  be  expended  in  an  endeavor 
to  fill  the  magazine  with  camouflaged  sales  artillery.  Rather  is 
it  wiser  to  study  a  most  successful  issue  of  a  house  magazine  in 
which  the  one  mention  of  the  maker  or  his  products  was  the  name 
of  the  enterprise  as  the  publisher  of  the  magazine.  This  was  the 
"Panama  Canal"  edition  of  a  house  magazine  published  in  New 
England,  which  was  devoted  entirely  to  the  Panama  Canal  and  its 

15 


226  EXPORT  MERCHANDISING 

significance.     A  folded  map  specially  prepared  with  Spanish  text 
and  illustrations  of  surpassing  interest  wore  included  in  it. 

First,  last  and  always  an  export  house  magazine  should  be 
edited  for  the  reader.  He  is  the  customer — and  as  the  customer, 
actual  or  prospective,  he  is  the  outstanding  figure  in  international 
commerce. 


CHAPTER  XXI 
THE  MOTION  PICTURE  IN  EXPORT  SELLING 

"The  most  important  factors  in  the  sales  process  are  based  upon 
the  visualization  of  tlio  product  itself  in  each  of  its  many  phases." 

— Ferdinand  A.  Wyinan,  Jr. 

Classification  of  the  Motion  Picture  as  a  Selling  Force.  Field  of  the  Export 
Motion  Picture  Inside  the  United  States.  Use  of  E.rport  Films  by  Domestic 
Commercial  Organizations.  Methods  of  Use  of  the  Traveling  Film  Outside 
the  United  States.  Use  of  the  Portable  Motion  Picture  Projector  in  Exporting. 
Branch  Office  Equipment.  The  Export  Commission  House  and  the  Motion 
Picture.  Uses  Abroad  of  Portable  Projector.  Advantages  of  Use  by  Agents. 
How  the  Motion  Picture  Helps  the  Export  Salesman.  Obstacles  in  the  Use 
of  Motion  Pictures  Abroad.  Use  of  the  Traveling  Film  in  Motion  Picture 
Houses  Abroad.  Educational  Use  of  the  Export  Motion  Picture.  Possibilities 
in  Interesting  Large  Consumers  by  Pictures. 

The  one  great  mechanical  aid  in  export  selHng  invented  in 
the  past  century  is  the  motion  picture.  It  is  not  in  itself  a  new 
selling  force.  It  quite  clearly  is  a  form  of  the  printed  word — 
the  "illustration-advertisement" — just  as  the  phonograph  is  but 
a  variation  of  the  spoken  word.  Like  all  mechanical  aids  to 
selling,  its  effectiveness  depends  upon  the  adaptability  of  the  aid 
to  its  purpose  and  upon  the  development  of  skill  and  method  of 
use. 

An  Analysis  of  Possibilities. — The  possibilities  of  the  motion 
picture  in  export  selling  are  easily  divided  into  two  major  classes 
based  on: 

1.  The  separate  film 

2.  The  portable  motion  jiicture  projector. 

THE  TRAVELING  SEPARATE  FILM 

The  uses  of  the  traveling  separate  film  alone  can  in  turn  be 
divided  into: 

1.  Uses  inside  the  United  States 

2.  Uses  outside  the  United  States. 

Export  Uses  Inside  the  United  States. — At  first  cry  it  may 
seem  absurd  to  attempt  to  find  the  motion  picture  in  export 
selling  used  inside  the  United  States.     This,  however,  is  one  of 

227 


228  EXPORT  MERCHANDISING 

the  uses  of  the  motion  picture  to  which  the  advanced  leaders  in 
export  thought  are  paying  decided  attention.  One  of  the  great 
assets  to  any  exporting  country  hes  in  the  visits  of  buyers  from 
other  nations.  In  the  tomorrow  of  American  exporting  no  city 
in  this  country  which  places  the  proper  value  upon  export  selling 
will  be  without  a  motion  picture  projecting  room  under  the 
auspices  of  a  commercial  organization. 

It  does  not  require  a  stretch  of  imagination  to  follow  the  sales 
possibilities  of  this  plan  which  has  already  been  worked  out 
practically  and  in  detail.  Every  manufacturing  exporter  knows 
the  value  of  visits  to  his  factories  by  visiting  foreign  buyers. 
He  realizes,  also,  that  only  a  small  fraction  of  commercial  and 
governmental  visitors  from  other  countries  make  the  opportunity 
to  visit  his  factories.  He  is,  therefore,  not  only  willing  but  also 
has  a  decided  desire  to  bring  his  factories  before  the  eyes  of  the 
visitor  from  abroad  who  can,  directly  or  indirectly,  add  to  his 
profits  from  export  sales. 

Service  of  Commercial  Bodies. — In  recognition  of  this  principle, 
the  commercial  bodies  in  leading  export  centers  provide  a  means 
to  this  end.  An  adequate  room  is  set  aside  solely  for  the  display 
of  industrial  motion  pictures.  The  room  is  equipped  with  a 
fixed  motion  picture  booth,  platform,  screen  and  operator.  The 
room  is  ample  in  size  to  seat  a  delegation  of  foreign  visitors  and 
their  hosts.  In  this  room  is  contained  the  "library"  of  motion 
picture  films  which  represent  the  industrial  plants  in  the  member- 
ship of  the  commercial  organization.  The  films  are  supplied 
by  and  at  the  expense  of  the  individual  enterprises  seeking  export 
trade. 

The  commercial  organization  notifies  each  manufacturer 
whose  films  are  listed  by  subjects  in  the  "library"  of  the  coming 
visits  of  individuals  or  delegations  from  other  countries.  This 
enables  each  manufacturer  to  supply  for  the  occasion  his  trained 
lecturer  to  explain  his  film  as  it  is  presented  on  the  screen.  When 
this  is  impossible,  for  any  reason,  an  attendant  reads,  as  the 
film  is  shown,  the  text  supplied  in  manuscript  form  by  the 
exporting  manufacturer. 

How  Foreign  Visitors  Select  Films. — The  selection  of  films  to 
be  shown  can  be  left  to  the  visitor  or  visitors  from  abroad.  This 
is  made  possible  in  two  ways.  If  the  visitors  give  advance  notice 
of  their  coming,  the  commercial  organization  sends  a  catalog  of 
the  films  in  the  "library."     This  catalog  is  descriptive.     It  not 


THE  MOTION  PICTURE  IN  EXPORT  SELLING  229 

only  lists  the  manufacturers  interested,  but  also  their  products 
and  the  general  nature  of  their  films  on  file.  From  this  catalog, 
the  visitors  make  their  selection  before  they  reach  the  city,  and 
thus  enable  the  commercial  organization  to  give  advance  notice 
to  the  manufacturers  whose  films  have  been  selected. 

The  casual  foreign  visitor  who  has  not  given  the  commercial 
organization  notice  of  his  coming,  nevertheless  has  the  oppor- 
tunity to  choose  the  films  covering  products  in  which  he  is 
interested.  Usually,  time  permits  manufacturers  thus  favored 
to  be  notified  by  telephone  and  to  send  their  lecturer  to  accom- 
pany the  showing  of  their  films. 

The  Traveling  Separate  Film  Abroad. — The  use  of  the 
"traveling  film"  outside  the  United  States  is  still  in  its  infancy. 
Already  limited  distribution  is  possible  through  private,  semi- 
governmental  and  governmental  releases.  The  Y.  M.  C.  A. 
and  other  organizations  have  circuits  and  routings  of  value  to 
many  exporters.  But  for  the  present  and  in  the  immediate 
future  the  use  of  the  traveling  film  will  depend,  for  directly 
traceable  results,  upon : 

1.  The  export  salesman 

2.  Branch  houses  located  abroad 

3.  Agents  resident  abroad 

4.  Customers  located  abroad. 

The  nature  of  the  film  and  the  possibilities  offered  in  each  foreign 
market  must  inevitably  determine  the  limitations  of  profitable 
presentation. 

THE  PORTABLE  MOTION  PICTURE  PROJECTOR 

The  use  of  the  portable  motion  picture  projector  in  export 
selling  can  be  divided  into  the  same  major  groupings  of: 

1.  Uses  inside  the  United  States 

2.  Uses  outside  the  United  States. 

Export  Uses  Inside  the  United  States. — Uses  inside  the  United 
States  are  far  more  varied  than  would  be  expected  by  the  unini- 
tiated. One  Massachusetts  exporting  manufacturer  uses  his 
portable  projector  even  when  his  foreign  visitors  come  to  his 
factory.  These  visitors  are  divided  by  him  into  two  classes — 
those  who  can  be  induced  to  spend  the  time  necessary  to  go 
through  his  plant,  and  those  who  cannot  be  induced  to  spend  the 
hour  or  hours  necessary  to  an  inspection  of  his  factory. 

Both  groups,  however,  view  at  least  one  of  his  films.      The 


230  EXPORT  MERCHANDISING 

visitor  who  is  uiiahle  to  inspect  the  plant  itself  is  shown  quickly 
throufj;h  it  l)y  means  of  a  screen  that  unrolls  on  the  wall  of  the 
reception  room  and  a  portable  projector  mounted  on  a  table  which 
rolls  out  from  a  closet.  A  carefully  trained  assistant  from  the 
export  sales  department  explains  the  film,  leaving  the  high 
executives  to  remain  at  the  visitor's  side  and  to  answer  his 
questions  and  emphasize  the  important  points. 

When  the  Foreign  Buyer  Visits  the  Factory. — Even  when  the 
customer — actual  or  prospective — has  ample  time  at  his  disposal, 
the  portable  motion  picture  outfit  is  brought  into  play.  It 
partly  prepares  him  for  what  he  is  to  see  by  reels  showing  the 
gathering  of  raw  materials  in  many  countries.  It  affords  oppor- 
tunity for  the  hosts  to  learn  and  note  the  points  in  plant  and 
process  that  are  of  greatest  interest  to  the  visitor.  It  serves 
as  an  admirable  means  doubly  to  impress  upon  the  mind  of  the 
buyer  the  outstanding  points  of  which  the  manufacturer  wishes 
the  foreign  visitor  to  form  and  retain  clear  mental  photographs. 

The  executive  who  later  accompanies  the  visiting  customer 
through  the  factory  is  thus  wisely  guided  to  give  extra  time  to 
the  features  in  which  the  guest  has  shown  special  interest.  He 
is  also  warned  against  failure  to  spend  ample  time  to  stress 
features  in  which  even  the  motion  picture  did  not  create,  in  the 
customer's  interest,  adequate  recognition.  In  some  of  the  largest 
American  enterprises  the  motion  picture  at  the  factory  is  used 
to  show  distant  plants,  the  work  of  which  enters  into  the  finished 
product.  In  one  striking  case  where  certain  machinery,  always 
built  to  order,  is  involved  the  motion  picture  is  the  one  satisfac- 
tory method  of  explanation  of  the  machinery  in  use. 

Branch  Office  Equipment. — The  use  of  the  portable  motion 
picture  projector  in  export  selling  here  at  home  is  by  no  means 
limited  to  displays  at  the  home  office  or  factory.  More  and  more, 
export  executives  are  equipping  branch  offices  to  display  their 
export  films.  This  is  particularly  true  when  the  home  office  or 
factory  is  inland  and  isolated — rather  than  located  in  a  large 
exporting  center.  In  such  cases  the  branch  offices  in  the  sea- 
board cities  (or  the  export  offices  if  located  at  seaboard)  are 
equipped  to  show  on  the  screen  and  in  motion  views  of  plant 
and  process  in  a  most  attractive  setting. 

Primarily  these  "seaboard"  displays  of  motion  pictures 
appeal  in  cases  where  the  foreign  visitor  cannot  be  induced  to 
visit  the  factories.     But  in  use  it  has  been  found  repeatedly  that 


THE  MOTION  PICT  1 1  RE  IN  EXPORT  SELLING  231 

after  viewing  the  motion  picture  presentation,  the  visitor  from 
abroad  has  found  time  to  make  a  trip  to  the  factory  to  see  the 
actual  machinery  and  processes  at  first-hand.  This,  undoubtedly 
in  many  cases,  has  been  at  the  expense  of  some  exporter  whose 
unvisited  and  nearer-located  plant  was  not  visited,  because  of  the 
appeal  made  by  the  motion  picture  of  some  competitor. 

Branch  office  managers  welcome  the  portable  motion  picture 
outfit.  It  enables  them  to  show  domestic  as  well  as  export 
films,  and  proves  of  double  service  in  increasing  sales,  both  at 
home  and  abroad.  It  is  usual  to  supply  branch  houses  with  both 
a  short  and  a  complete  "lecture."  An  assistant  at  the  branch, 
in  case  there  is  not  a  definite  employee  of  the  export  department 
located  at  the  branch,  is  selected  to  display  the  export  motion 
picture  and  to  explain  its  message.  Above  all,  the  motion  pic- 
ture at  the  branch  house  should  be  used  to  make  sales  on  the  spot 
in  case  the  visitor  cannot  be  persuaded  to  include  the  inland 
factory  in  his  itinerary. 

Advantages  for  Export  Commission  Houses. — One  of  the 
profitable  uses  of  the  portable  motion  picture  in  export  selling 
here  in  the  United  States  comes  in  connection  with  indirect 
exporting.  One  exporting  manufacturer  whose  product  is 
largely  distributed  abroad  through  indirect  but  highly  effective 
channels,  considers  his  portable  motion  picture  his  best  sales 
argument.  In  addition  to  weekly  displays  at  the  branch  office  in 
New  York,  this  exporting  manufacturer  has  a  salesman  who 
visits  the  offices  of  export  commission  houses  and  similar  enter- 
prises making  private  displays  of  their  export  reels.  These 
private  displays  are  by  appointment.  The  programs  make 
possible  presentations,  with  talks  ranging  from  thirty-five 
minutes  to  three  houi's,  as  opportunity  affords. 

These  motion  picture  presentations  have  been  both  popular  and 
effective.  In  this  many-itemed  line  of  products  the  increased 
number  of  products  sold  trebled  in  a  year,  with  an  even  greater 
increase  in  volume  of  dollar  sales.  The  export  commission  houses 
which  are  familiar  with  this  method  capitalize  the  manufac- 
turer's equipment  when  they  have  visitors  whose  importations 
are  of  such  nature  as  to  indicate  even  a  possible  interest  in  these 
films.  Indeed,  so  compelling  has  this  use  of  the  motion  picture 
proved  itself  that  it  will  be  surprising  if  export  commission 
houses  do  not  set  aside  special  motion  picture  rooms  with  AxcmI 
projectors  and  a  lil)rarv  of  films. 


232  EXPORT  M  EEC  11  AS  ni  SI  NO 

Display  in  Hotel  Rooms  in  Sea  board  Cities. — There  are 
many  other  uses  of  the  portable  motion  picture  projector  for 
export  selling  inside  the  United  States.  These  include  displays 
in  hotel  rooms  when  the  inland  export  manager  comes  to  sea- 
board to  meet  foreign  customers  on  arrival;  displays  at  times 
when  international  trade  conferences  are  held  and  visitors  from 
foreign  countries  are  present  in  large  numbers,  and  displays 
before  visiting  foreign  delegations  and  commissions  and  exhibi- 
tions at  export  conferences  and  in  connection  with  trade  associa- 
tion conventions.     Each  year  will  disclose  new  possibilities. 

THE  PORTABLE  MOTION  PICTURE  PROJECTOR  OVERSEAS 

The  most  valuable  single  division  of  use  of  the  motion  picture 
in  export  selling  is  unquestionably  in  connection  with  use  of  the 
portable  projector  outside  the  United  States.  The  portable 
motion  picture  projector  lends  itself  to  use  by: 

1.  Branch  houses  abroad 

2.  Agents  and  agencies  abroad 

3.  Circulating  from  customer  to  customer  abroad 

4.  The  export  salesman. 

The  first  three  divisions  are  all  but  self-explanatory. 

Use  by  Branch  Houses  Abroad. — The  branch  house  abroad 
uses  the  portable  motion  picture  projector  in  the  same  manner 
as  does  the  branch  house  in  the  United  States.  It  uses  it  to 
display  films  to  the  visitor,  and  it  takes  it  to  the  export  commis- 
sion houses.  It  also  uses  it  in  connection  with  its  travelers 
along  lines  identical  with  those  later  described  in  connection 
with  the  export  salesman  reporting  to  headquarters  in  the 
United  States. 

Capitalizing  Exclusive  Export  Agents. — There  is  a  steady 
growth  in  the  use  of  the  portable  motion  picture  projector  by  the 
enterprises  which  depend  largely  or  wholly  upon  exclusive 
agents  resident  abroad.  More  and  more  the  tremendous  aid  of 
the  motion  picture  to  the  foreign  agent  is  coming  to  general 
appreciation.  From  the  standpoint  of  the  manufacturing 
exporter  this  use  of  the  motion  picture  has  compelling  advantages. 
First  of  all,  the  method  of  presentation  is  still  unusual  in  many 
major  markets  and  unique  in  many  minor  markets. 

The  use  of  the  portable  motion  picture  projector  thus  adds 
novelty  to  a  full  and  accurate  presentation  of  the   exporting 


Fig.   14. —  Montgomery   Ward   in   Dutch. 


Fig.    15. — The  general  store  in  the  background  is  faced  with  mail  order 
competition. 


THE  MOTION  PICTURE  IN  EXPORT  SELLING  233 

manufacturer's  message.  The  known  shrinkage  in  forcefulness 
of  presentation  of  the  exporting  manufacturer's  sales  message  by 
any  method  other  than  the  motion  picture  and  the  export  sales- 
man is  appalling  to  the  close  student  of  exporting.  The  typical 
agent  abroad  represents  several  lines.  He  cannot  possibly 
master  all  of  the  intricacies  of  each  product  he  represents.  His 
memory  of  the  major  and  minor  points  of  manufacture  alone 
must  diminish,  even  when  the  best  of  educational  coaching  is 
continuous.  The  motion  picture  film  not  only  gives  the  message 
accurately  and  completely,  but  also  serves  to  refresh  constantly 
the  memory  of  the  agent.  It  supplies  him  with  a  sales  medium 
that  saves  his  energy.  For  it  attracts  favorable  attention 
of  the  agent's  clientele  and  goes  far  toward  creating  desire  for 
possession.  Thus  the  agent's  selling  powers  are  conserved  for 
the   all-important   closing   of  the   actual  sale   of  merchandise. 

Routing  the  Portable  Projector.— The  use  of  the  portable 
motion  picture  projector  routed  from  customer  to  customer  in 
non-agency  lines  has  been  used  so  far  only  in  a  closely  limited 
field.  In  this  field,  however,  it  is  the  one  solution  (other  than  the 
visit  of  the  personal  representative)  that  fairly  solves  certain 
difficult  problems.  In  many  machinery  lines  the  assembling, 
use  and  repairs  are  most  difficult  to  cover  fairly  when  thousands 
of  miles  separate  maker  and  user.  The  portable  motion  picture 
projector,  with  films  made  solely  for  the  purpose  of  solving  these 
problems,  is  comparatively  inexpensive.  The  correct  assembling 
of  one  complicated  machine  is  insured  by  a  film  and  projector 
which  shows  step  by  step  the  proper  method.  As  the  film  can  be 
stopped  at  any  point,  the  user  of  the  machine  can  build  it  up 
section  by  section,  sure  that  each  step  is  correct,  and  without  loss 
of  time. 

Displaying  Machine  Attachments. — Similarly,  the  varying 
possibilities  of  use  of  a  machine  with  different  attachments  can 
best  be  shown  by  the  motion  picture.  Many  modern  machines 
have  exceedingly  diverse  uses.  The  most  explicit  of  explanatory 
booklets  cannot  rival  the  use  of  the  motion  picture  supplementing 
booklets  which  are  written  to  collaborate  with  the  motion  picture. 
The  correct  method  of  repairs  and  the  correct  installation 
of  machinery  is  another  wide  field  for  the  portable  motion  picture. 
In  territories  where  service  bureaus  cannot  be  profitably 
maintained  the  portable  motion  picture  projector  is  often  given 
outright  to  a  customer,  together  with  from  one  to  twenty  special 


234  EXPORT  MERCHANDISING 

films  (Unsigned  to  cover  uU  usual  and  many  unusual  happenings  to 
the  machine. 

The  exi)eriments  in  routing  these  portable  outfits  from  cus- 
tomer to  customer  have  been  successful  only  when  confined  to 
cities  where  a  motion  picture  specialist  can  examine  the  projector 
and  film  on  arrival,  and  superintend  the  film  display.  With  the 
increasing  simplicity  of  portable  outfits  and  their  greater  dura- 
bility there  can  be  no  question,  however,  that  present-day 
difficulties  arising  from  shipment  from  city  to  city  will  disappear. 
Formalities  attendant  upon  entry  and  dispatch  at  port  will  be  so 
lessened  as  to  expand  greatly  this  type  of  use  of  the  motion 
picture. 

The  Export  Salesman's  Assistant. — The  portable  motion 
picture  projector  is  the  one  great  addition  of  the  past  fifty  years 
to  the  export  salesman's  equipment.  By  far  the  most  valuable 
aid  to  the  salesman,  with  the  single  exception  of  his  samples,  the 
portable  motion  picture  has  multiplied  rather  than  merely 
increased  the  effectiveness  of  many  phases  of  the  export  sales- 
man's work.  The  portable  motion  picture  projector  dignifies  the 
salesman  and  the  enterprise  he  represents.  It  sells  the  institu- 
tion as  well  as  the  product.  It  convinces  the  importer  abroad  of 
the  standing  and  responsibility  of  the  manufacturer.  It  por- 
trays the  equipment  of  the  manufacturer  in  a  way  that  passes 
any  possibility  of  words  or  "still"  photographs. 

From  the  standpoint  of  the  large  and  responsible  manufac- 
turer, the  export  salesman  equipped  with  the  portable  motion 
picture  projector  has  exceptional  advantages.  With  such 
equipment,  size  of  plant  and  investment  is  proven  in  a  way 
that  must  be  taken  at  full  value.  It  enables  a  leader  in  an 
industry  to  display  his  leadership  without  boastful  claims. 
It  enables  the  large  manufacturing  exporter  to  differentiate 
himself  from  the  smaller  rival  less  careful  in  his  claims.  It 
supplies  exactly  the  right  background  for  important  orders. 
It  removes  any  reason  for  over-cautious  ordering  of  sample 
shipments.  The  better-informed  American  manufacturers  of 
today  fully  realize  that  many  beginnings  based  on  trial  orders  are 
the  reflection  of  the  importer's  mind  of  the  size  of  the  exporter's 
enterprise.  The  order  itself  results  from  conviction  of  worth  of 
product.  The  size  of  the  order  depends  upon  many  factors,  one 
of  which  is  always  the  responsibility  of  the  exporter.  No 
importer  hesitates  to  place  one  true  stock  order  for  products  in 


THE  MOTION  PICTURE  IN  EXPORT  SELLING  235 

which  he  has  confidence,  when  convinced  that  he  is  deahng  with 
an  enterprise  whose  size  proves  a  general  excellence  of  method  as 
well  as  of  product. 

How  the  Salesman  Uses  the  Portable  Projector. — The  uses  of 
the  portable  motion  picture  projector  by  the  export  salesman 
include: 

1.  Private  displays  before  principals 

2.  Store  presentations  before  the  staff 

3.  Semi-public  displays  before  an  assemblage  of  dealers 

4.  Semi-public  displays  before  users 

5.  Use  of  film  only  in  motion  picture  houses  as  part  of  regular  motion 
picture  program 

6.  Displays  on  shipboard 

7.  Semi-public  showings  under  auspices  of  educational  institutions. 

The  methods  of  use  of  the  portable  motion  picture  projector 
by  the  export  salesmen  of  a  leading  New  England  exporting 
manufacturer  have  so  much  to  commend  them  in  theory,  practice 
and  favorable  results  that  they  are  described  here  in  detail. 
The  initial  showing  each  trip  is  on  ship-board,  either  as  part  of 
regular  entertainment  or  as  a  semi-private  entertainment  with 
the  salesman  as  host  and  lecturer.  This  has  proved  in  many 
cases  to  lead  to  meeting  importers  returning  to  their  home  cities 
and  at  a  time  when  they  are  most  receptive  to  sales  suggestions. 
This  New  England  manufacturer  made  one  connection  abroad  as 
the  result  of  a  shipboard  showing  that  will  pay  in  profits  each 
year  more  than  the  entire  cost  of  the  entire  motion  picture 
equipment  of  all  export  salesmen  and  all  branch  houses. 

Arranging  for  Displays. — The  export  salesmen,  on  arrival  at 
each  city,  pay  their  courtesy  visits  to  each  customer.  On  this 
round  of  visits  they  arrange  for  an  individual  showing  in  their 
local  hotel  room  of  the  film  or  films  carried.  Each  trip,  at  least 
1,000  feet  of  new  film  is  added,  so  that  each  trip  there  is  a  new 
appeal  to  the  interest  of  each  importer.  At  these  private  show- 
ings, which  are  only  for  the  principals  of  each  importing  enter- 
prise, definite  engagements  are  made  to  show  the  films  at  the 
importer's  establishment  before  the  staff  of  employees. 

This  second  showing  is  highly  important  because  it  sells  the 
idea  of  preference  to  the  whole  organization  of  the  importer. 
It  acquaints  every  member  of  the  importer's  staff  who  is  con- 
sidered in  any  way  interested  with  the  story  of  the  exporting 
manufacturer,    the   manufacturer's   products   and   his   policies. 


236  EXPORT  MERCHANDISING 

It  supplies  a  reason,  rather  than  an  excuse  for  a  talk  to  all 
department  heads,  buyers  and  clerks.  It  tells  the  exporting 
manufacturer's  story  in  a  way  that  insures  remembrance  and 
acceptance  by  lazy  as  well  as  alert  minds.  It  provides  a  topic 
for  discussion  among  the  importer's  salesmen  long  after  the 
salesman  has  departed.  It  sells  the  idea  of  selling  as  well  as 
buying  the  products  of  the  manufacturer. 

Public  Showings  Before  Dealers. — In  some  important  centers 
and  with  lines  which  appeal  to  a  wide  variety  of  trade  outlets 
the  export  salesman  can  wisely  supplement  or  replace  private 
showings  in  stores  by  a  public  display  before  an  assemblage  of 
dealers.  This  is  exemplified  in  a  line  that  is  sold  generally  by 
hardware,  dry  goods,  grocery,  drug,  machinery,  automobile 
accessory,  book  and  other  stores.  In  Buenos  Aires  the  wholesale 
and  retail  outlets  in  these  lines  worthy  of  consideration  total 
over  three  hundred  outlets.  Each  year  the  traveling  representa- 
tive of  this  enterprise  rents  a  hall  that  seats  over  a  thousand, 
and  decorates  with  his  own  display  material.  Engraved  invita- 
tions bearing  his  name  and  that  of  the  American  manufacturer 
are  delivered  by  messengers  to  his  entire  list  of  customers  and 
prospective  customers,  and  in  many  cases  to  retail  customers  of 
his  wholesale  customers. 

The  motion  picture  display  includes  a  popular  non-commercial 
picture  to  cover  the  period  while  late-comers  are  arriving,  and 
then  continues  for  a  solid  two  hours.  Incidental  music  and  des- 
criptive addresses  are  used  so  successfully  that  the  time  passes 
quickly  and  the  display  is  over  when  the  audience  would  welcome 
even  more  footage. 

Creating  Consumer  Demand. — One  of  the  most  effective 
methods  of  consumer  advertising  in  many  cities  abroad  is  open 
for  the  salesman  through  semi-public  displays  with  the  motion 
picture  projector.  The  best  practice  is  based  upon  free  distribu- 
tion of  tickets  by  interested  dealers  to  their  customers  of  record. 
These  semi-public  displays  before  users  who  are  selected  by 
dealers  afford  the  salesman  the  opportunity  to  interest  many 
more  users  than  could  otherwise  be  attracted  to  a  single  meeting. 
In  many  lines  such  showings  pave  the  way  admirably  to  an  excep- 
tional opportunity  for  demonstration  of  the  actual  product  and 
for  most  effective  sampling.  An  integral  part  of  an  intensive 
introductory  campaign,  they  supply  a  sales  medium  without 
equal. 


THE  MOTION  PICTURE  IN  EXPORT  SELLING  237 

With  the  amazingly  rapid  strides  in  the  art  of  commercial 
motion  pictures  it  is  now  entirely  possible  to  present  films  which 
appeal  to  a  general  audience  to  a  degree  that  makes  them  accept- 
able to  the  proprietors  of  motion  picture  houses.  The  good 
exporting  manufacturer  often  has  special  films  taken  with  this 
one  object  in  view,  so  that  his  export  salesmen  may  capitalize 
every  profitable  angle  of  the  export  use  of  the  motion  picture. 
Armed  with  such  a  film,  usually  not  over  1,000  feet,  the  export 
salesman  can  secure  a  free  daily  showing  while  he  is  temporarily 
resident  in  a  city.  It  must  be  emphasized  that  the  film  rather 
than  the  salesman  will  inevitably  determine  its  acceptance  or 
rejection  for  this  type  of  showing. 

The  Motion  Picture  in  Educational  Institutions. — Modern 
education,  abroad  as  at  home,  has  found  in  the  motion  picture 
a  wonderful  medium.  Today  only  the  most  technical  of  products 
is  unwelcome  in  the  classroom.  The  export  salesman  of  today 
turns  as  naturally  to  find  educational  outlets  for  display  of  his 
film  as  he  does  to  find  newly  established  prospective  customers. 
More  than  one  important  contract  for  school  supplies  has  been 
secured  by  these  showings.  Thousands  of  school  children  have 
been  given  exactly  the  right  foundation  by  these  displays,  on 
which  the  manufacturer  can  build  a  life-time  of  preference  for 
his  products. 

Even  such  an  imposing  list  of  uses  of  the  portable  motion 
picture  projector  in  the  hands  of  the  export  salesman  by  no 
means  covers  its  entire  field.  Many  products  lend  themselves 
to  valuable  individual  displays  before  users  for  the  benefit  of 
trade  outlets.  One  American  manufacturer's  export  salesmen 
visit  each  bank  in  company  with  a  dealer's  salesman.  In  each 
bank  a  showing  of  a  film  is  made,  that  directly  ties  up  the  bank 
with  the  device  thus  displayed.  Sales  upon  sales  have  been 
made  to  users  by  use  of  the  motion  picture  in  the  hands  of  the 
salesman,  when  without  the  excuse  of  motion  picture  presentation 
all  other  efforts  had  been  seriously  handicapped. 

Improving  the  Export  Salesman. — The  portable  motion  picture 
projector  has  enlarged  the  sphere  of  action  of  the  export  sales- 
man. Close  students  of  the  salesman  and  his  work  have  known 
for  at  least  three  decades  that  his  success  is  based  upon  selling  one 
man  at  a  time.  Since  the  salesman's  daily  bread  depends  upon 
his  ability  to  enlist,  hold  and  increase  to  the  selling  point  the 
interest  of  one  man  at  a  time,  he  has  become  a  specialist.     As  he 


238  EXPORT  MERCnANDlSING 

perfects  his  specialty  and  sekloin  is  given  the  opportunity 
to  address  more  than  one  man  at  a  time,  he  loses  rapidly  what- 
ever latent  ability  might  have  existed  in  himself  to  be  a  successful 
speaker  before  a  larger  audience.  Many  excellent  salesmen  who 
are  most  entertaining  conversationaHsts  are  disastrous  failures 
when  forced  to  appear  before  an  audience  of  even  a  dozen  men. 

This  truth  was  accepted  at  the  outset  as  limiting  most  nar- 
rowly the  use  of  the  portable  motion  picture  projector  by  export 
salesmen.  It  was  considered  as  axiomatic  that  the  salesman's 
explanatory  comments  on  the  film  as  it  developed  on  the  screen 
must  be  limited  to  appearances  before  a  group  of  dealer's  clerks. 
It  was  all  but  taken  for  granted  that  the  picture  alone  and  of 
necessity  would  supply  the  only  sales  appeal  before  a  larger 
gathering.  But  in  practice,  all  of  these  prophecies  have  been 
proved  to  be  entirely  incorrect.  Export  salesmen  who  have  with 
greatest  reluctance  appeared  on  the  platform,  have  found  it 
altogether  an  easy  task  to  accompany  with  words  a  picture  on 
which  the  attention  of  a  gathering  was  focussed.  The  moment 
salesmen  discovered  for  themselves  that  the  spectators  were 
looking  at  the  display  on  the  screen  and  all  but  unconscious  of  the 
lecturer,  a  new  era  of  the  export  use  of  the  motion  picture  came 
into  being. 

How  Salesmen  Are  Made  into  Public  Speakers. — After  even  a 
single  appearance  with  his  film  the  export  salesman  found  great 
peace  of  mind.  He  lost  self-consciousness,  not  only  because  the 
spectators  focussed  their  eyes  and  a  great  part  of  their  mental 
attention  on  the  screen  presentation,  but  also  because  he,  too, 
was  busily  engaged  in  watching  the  development  of  the  picture. 
The  scenes  portrayed,  by  their  very  familiarity,  steadied  him  and 
made  his  talk  a  pleasure  to  him  instead  of  a  torture.  Doubtless 
the  semi-darkness  is  also  a  psychological  factor. 

One  of  the  great  assets  of  the  portable  motion  picture  pro- 
jector lies  in  the  very  fact  that  it  quickly  and  thoroughly  con- 
vinces the  export  salesman  of  his  ability  to  address  easily  and 
convincingly  an  audience  of  any  size. 

Brief  mention  has  already  been  made  of  the  wonderful  advances 
in  the  art  of  commercial  motion  pictures  for  use  in  export  fields. 
Comment  in  earlier  pages  has  pointed  to  the  possible  variety 
and  nature  of  the  pictures  themselves.  This  phase  of  the  use  of 
motion  pictures  in  export  selling  is  altogether  too  important  to 
pass  over  with  scanty  consideration.     To  the  expert  carpenter, 


THE  MOTION  PICTURE  IN  EXPORT  SELLING  239 

the  mere  possession  of  a  chisel  and  knowledge  of  method  of  use  is 
only  a  beginning.  Each  chisel  must  be  adapted  to  the  use  to 
which  it  will  be  put.  In  sharpness  of  edge,  in  width  of  blade,  in 
handle  and  in  steel  it  must  fulfill  exacting  requirements.  Simi- 
larly, export  motion  pictures  must  be  built  for  and  adapted  to  the 
uses  which  will  be  found  for  them  in  foreign  fields. 

The  Motion  Picture  as  a  Salesman. — It  is  a  far  cry  from  the 
earlier  eye-torturing  motion  pictures  which  merely  showed  a 
section  of  a  manufacturing  floor  and  a  "close-up"  of  a  process, 
to  the  commercial  pictures  of  today  taken  with  the  purpose  of 
conveying  a  series  of  sales  messages.  The  motion  picture  in 
export  selling  is  a  salesman  as  carefully  selected,  corrected  and 
developed  as  its  human  counterpart.  A  selling  science  and  a 
definite  technique  has  been  brought  into  being  in  the  use  of  the 
spoken  word  and  written  word  in  export  selling.  So,  too,  has 
there  been  brought  into  being  in  connection  with  the  use  of  the 
motion  picture  in  export  selling  a  scientific  base  and  a  definite 
technique  which  all  exporters  must  study  and  master  before  the 
most  profitable  results  can  be  secured. 

Gathering  Raw  Materials. — It  cannot  be  stated  too  emphat- 
ically that  the  motion  picture  in  export  selling  does  not  begin  and 
end  in  showing  how  the  product  is  made.  This  truth  can  be 
driven  home  by  a  description  of  the  type  of  films  which  are  the 
best  profitmakers.  One  effective  series  enlists  the  interest  by  the 
division  of  the  main  film  into  four  distinct  parts.  The  first  shows 
the  gathering  of  raw  materials  in  the  four  quarters  of  the  world. 
Caravan  trains  and  dug-out  canoes  vie  in  creating  the  right 
atmosphere  with  mining  scenes  and  jungles  in  far-off  countries. 

Manufacturing  and  Assembling. — The  second  set  of  reels  is 
devoted  to  the  manufacture  and  assembling  of  the  finished 
product.  Here  silent  salesmanship  is  at  its  height.  Thus  is  the 
care  in  manufacture  directly  sold  to  the  spectator.  The  marvel- 
ous accuracy  and  economy  of  the  exclusive  machinery  is  indel- 
ibly portrayed.  The  facilities  for  exporting  and  the  correctness 
of  each  detail  in  export  packing  are  made  an  object  of  visible 
proof.  Even  the  existence  of  a  world-wide  trade  is  indicated  by 
views  of  various  divisions  of  the  export  traffic  department  with 
"close-ups"  showing  shipping  marks  on  cases  destined  for 
markets  large  and  small  wherever  men  live  and  buy. 

Transporting  Merchandise  to  Importers. — The  third  series  of 
reels  shows  products  on  the  way  to  and  in  use  in  foreign  markets. 


240  EXPORT  MERCHANDISING 

Bullock  loads  and  ox  carts  are  seen  in  Ceylon,  South  Africa  and 
in  the  Philippines;  camel  loads  are  seen  in  Tunis  and  West 
Australia;  elephant  loads  in  India  are  followed  by  dashing  three- 
horse  hitches  in  Hussia,  and  the  llama  and  the  all-important 
mule  are  shown  to  emphasize  the  importance  of  the  export  sales 
in  South  America.  Into  offices  and  homes  in  every  nation  these 
films  take  the  spectator  to  show  the  product  in  use.  Each  time 
the  display  exhibits  its  picture  from  a  sales  angle. 

In  the  Foreign  Dealer's  Store. — The  fourth  and  final  series 
in  this  export  film  shows  the  product  in  sale  in  dealer's  establish- 
ments abroad.  It  shows  the  building  up  of  window  displays 
in  Punta  Arenas  and  in  Iceland.  It  shows  novel  aisle  table, 
counter  and  shelf  displays  in  Buenos,  in  Honolulu,  and  in  Japan. 
It  shows  the  method  of  sale  and,  with  a  salesman's  eyes,  takes 
the  spectator  into  the  intricacies  of  merchandising  in  market 
after  market. 

The  Future  of  the  Motion  Picture. — This  is  but  one  series 
of  films.  The  series  is  designed  to  be  the  basis  of  a  motion 
picture  display.  In  addition,  films  are  taken  especially  to 
interest  the  user.  Still  others  are  based  on  scenarios  written 
for  the  school  child,  the  college  student  and  the  educator. 
Beyond  these,  the  entire  wide  fields  of  comedy  and  drama  are 
employed  to  convey  selling  messages.  One  comedy  scenario 
called  for  an  outlay  of  over  $24,000.  One  commercial  drama  is 
based  on  a  most  thrilling  plot,  and  for  presentation  in  six  absorb- 
ing reels. 

Fully  equipped  with  the  utmost  that  the  film  and  screen  can 
make  possible,  the  export  department  of  today,  and  particularly 
of  tomorrow,  will  depend  more  and  more  upon  the  motion 
picture  to  smooth  the  road  to  export  profits. 


CHAPTER  XXII 
SAMPLES  IN  EXPORT  SELLING 

"Whenever  an  enterprise  can  use  samples  in  its  export  selling 
these  should  form  an  important  part  of  any  sales  campaign." 

— Direct  Exporting. 

Fundamentals  of  Sam-pling.  How  They  Can  Be  Distributed.  European 
Use  of  Samples.  Example  of  Loss  through  Poor  Packing  of  Samples.  Visual- 
ization of  a  Salesman's  Samples  in  Use.  Excellent  Sample  Displays  Described 
in  Detail.  The  Exclusive  Agent  and  His  Samples.  Why  Samples  Increase 
Sales.  Creating  Consumer  Demand  by  Sampling.  Examples  of  Sound 
Consumer  Sampling.  How  to  Turn  Consumer  Inquiries  into  Dealer  Orders. 
The  Psychology  of  Sampling.  Sampling  Combined  with  Advertising.  Speci- 
men Campaign  Based  upon  Coupon  Advertising.  Rules  Governing  Profitable 
Distribution  of  Samples. 

No  matter  how  complete  the  verbal  description,  or  how  many 
colors  may  be  used  to  illustrate  an  article,  these  fade  before  the 
actual — the  product  or  its  miniature.  The  sample  is  tangible. 
It  is  of  three  dimensions  and  demonstrates  itself.  It  is  an  actual 
specimen;  it  is  the  proof  of  the  seller's  honesty  of  statement, 
it  is  a  concrete  reason  for  purchase. 

Judicious  use  of  samples  is  the  main  reason  for  many  striking- 
successes  in  American  exporting.  Comparatively  few  have 
recognized  the  compelling  power  of  the  sample  and  have  given 
their  possible  uses  the  careful  study  they  deserve.  These  few 
consider  them  so  powerful  as  sales  weapons  that  they  invariably 
make  them  an  essential  part  of  any  well-balanced  campaign  in 
lines  which  permit  their  use. 

User's  Classified. — From  the  viewpoint  of  the  American 
exporters  the  wise  user  includes  distribution  to : 

1.  Salesmen 

2.  Agents 

3.  Wholesalers 

4.  Retailers 

5.  Consumers. 

Importers   abroad   rightly   expect   the   salesman,    where   the 
nature  of  the  product  permits,  to  give  them  more  than  a  word 
picture  or  a  catalog  illustration  to  guide  them  in  their  purchases. 
16  241 


242  EXPORT  MERCHANDISING 

Toda}^  as  ahva^^s,  the  dealer  abroad  is  sold  on  the  idea  of  buying 
from  sample  on  far  more  lines  than  shoes  and  textiles.  The  very 
fact  that  the  dealer  demands  samples  to  be  shown  by  direct 
salesman  is  a  fact  to  which  far  more  weight  should  be  attached 
than  the  average  export  manager  seems  willing  to  admit. 

European  Achievements. — It  is  true  that  in  years  past  the 
Belgian  and  the  French  travelers  have  carried  samples  more 
attractively  packed.  It  is  true  that  the  English  machinery 
samples  in  particular  have  been  displayed  in  a  manner  which 
appealed  more  strongly  to  the  mechanically  inclined.  It  is  true 
that  the  Italian  travelers  carried  the  exhibition  idea  as  against  the 
sample  idea  far  beyond  any  American  traveler — if  we  except 
the  dozen  American  exporters  who,  from  their  export  start,  have 
outranked  the  entire  field  in  the  use  of  exhibition-sample  methods. 

It  is,  indeed,  seldom  today  that  an  export  manager  pays 
adequate  attention  to  the  background  of  his  samples.  Salesmen 
are  frequently  equipped  with  trunks  and  these  trunks  filled  with 
samples  attractive  in  themselves  but  absolutely  without  material 
for  their  proper  presentation.  This  fault  will  prove  a  serious 
handicap  with  the  return  of  active  competition  and  the  coming 
of  a  normal  buyer's  market.  There  is  a  world  of  difference 
between  goods  bought  and  goods  sold. 

As  an  illustration  of  this  fault,  an  export  manager  in  New  York 
by  chance  pointed  to  a  trunk  in  which,  he  said,  were  the  "elabo- 
rate" samples  the  salesman  would  carry  on  his  trip.  The  trunk 
was  locked  and  strapped  ready  to  go  on  the  steamer,  but  the 
export  manager  graciously  yielded  to  a  whim  and  had  it  opened 
up.  It  was,  indeed,  an  interesting  sight.  The  trunk  was  filled 
to  the  brim.  The  top  layer  was  of  samples  in  holiday  "pretty 
girl"  cardboard  boxes. 

Costly  Packing. — When  a  box  was  picked  out  of  the  top  layer, 
it  rattled!  It  may  seem  incredible,  ])ut  from  top  to  bottom  the 
trunk  was  filled  with  samples  free  to  slide  back  and  forth  with 
each  wavelet,  samples  so  heavy  that  the  boxes  would  literally 
have  been  macerated  before  their  journey's  end.  To  make 
matters  worse,  no  provision  had  been  made  for  breakage  and 
soilage.  The  samples  were  "one  of  a  kind"  even  in  the  most 
important  lines.  Absolutely  no  thought  had  been  given  to  the 
display  of  the  samples.  Not  a  single  display  fixture,  background 
or  sign  was  in  the  outfit. 

When  this  export  manager's  attention  was  brought  to  focus 


SAMPLES  IN  EXPORT  SELLING  243 

on  the  function  of  the  sample,  he  solved  all  minor  problems  in  his 
characteristically  correct  way.  The  major  fault  was  not  lack  of 
interior  packing  of  the  samples;  it  was  the  export  manager's 
failure  to  visualize  his  samples  engaged  in  the  world-old  game  of 
selling  goods.  Until  brought  to  realization  of  error,  he  merely 
saw  some  exceptionally  attractive  "holly  and  pretty  girl" 
boxes.  It  was  not  until  in  his  mind  he  traveled  with  those 
samples  and  saw  himself  in  his  hotel  room  in  Bombay  after 
thousands  of  miles  of  travel,  facing  the  buyer  for  John  Collins, 
Ltd.,  that  he  saw  the  sample  trunk  as  a  sales  force. 

Repairs  Made  Simple. — Now  he  has  a  trunk  of  repair,  replace- 
ment, background  and  display  material  for  each  few  trunks  of 
samples.  Visualize  the  difference.  The  first  picture  is  of  a  hotel 
room  with  samples  in  once  attractive  but  now  soiled  and  damaged 
boxes.  The  second  picture  is  a  table  8  feet  long  by  4  feet  wide, 
covered  with  a  purple  velvet,  rich  in  color  and  depth  of  pile. 
The  background  display  shows  a  night  scene  on  the  North  River 
looking  eastward  toward  New  York's  skyscraper  sky-line.  The 
score  of  fixtures  of  graduated  height,  placed  according  to  the 
layout  of  an  expert,  hold  products  freshly  retouched  in  immacu- 
late cartons.     Mirrors  reflect  and  multiply  the  display. 

In  many  lines  the  samples  carried  by  the  salesman  must  in 
truth  be  carried  by  him.  Not  always  and  not  everywhere 
can  each  buyer  be  given  a  private  display  in  an  adequate  manner 
in  a  hotel  room.  Very  often  it  is  wisdom  to  show  samples  in 
direct  comparison  to  less  attractive  goods  on  the  importer's 
shelves.  But  this  freciuent  truth  does  not  excuse  lack  of  back- 
ground for  samples. 

An  Excellent  American  Sample  Set. — One  of  the  most  attrac- 
tive and  durable  salesman's  sample  sets  is  for  a  matter-of-fact 
line  every-day  office  supply.  These  samples  are  in  trays  made 
of  black  pin  seal  with  heavy  silver-plated  fittings.  The  inside 
is  lined  with  the  darkest  of  heavy  green  velvet.  Each  bottle  and 
package  is  mounted  to  set  off  its  attractiveness.  Each  case  is 
designed  to  meet  the  needs  of  the  particular  territory  to  which  it 
will  be  carried.  Each  tray  is  built  by  a  craftsman  who  designs 
and  executes  the  display  cases  of  fashionable  jewelers.  Even  the 
strap  which  makes  it  easy  for  the  individual  sample  to  be  Hfted 
from  its  setting,  is  of  heaviest  silk,  perfectly  matched  to  the 
velvet.  An  extra  supply  of  labels,  cartons  and  parts  is  carried  in 
the  case  in  a  specially  built  wallet  type  of  container.     A  minia- 


244  EXPORT  MERCHANDISING 

ture  dustless  duster,  sample  size  can  of  polish  and  burnisher 
supplied  the  finishing  touches  to  an  admirable  outfit. 

The  sample  should  be  made,  by  its  surroundings,  to  stand  for 
the  ability  and  the  dignity  of  its  maker.  The  salesman's  samples 
should  back  up  his  words,  "You  will  find  first  sales  easily  made 
because  of  the  attractiveness  and  convenience  of  the  package, 
while  your  steady  profit  will  come  from  the  constant  stream  of 
re-orders  due  to  the  merit  of  the  product  in  use." 

SAMPLES  FOR  AGENTS 

What  becomes  of  the  samples  sent  to  agents  abroad?  If  they 
are  adequately  displayed,  is  it  more  than  good  fortune?  Hardly 
half-a-dozen  exporters  in  the  world  have  given  a  tithe  of  their 
attention  at  any  period  of  their  sample  interest  to  the  proper 
display  of  samples  by  agents.  In  lines  as  varied  as  tractors  and 
pen  points  it  inevitably  develops  that  the  larger  the  unit  the 
more  nearly  adequate  the  display.  Pianos,  automobiles  and 
motor  boats  cannot  be  shghted  and  placed  out  of  sight — hence 
they  receive  at  least  a  part  of  the  attention  their  size  compels. 
But  it  is  a  tribute  to  the  export  art  of  selling  phonographs  to  be 
able  to  record  their  almost  invariably  good  displays  from  Mexico 
to  Ceylon.  When  the  product  drops  to  smaller  size,  any  worthy 
display  is  usually  a  tribute  to  the  agent  rather  than  to  fore- 
thought of  the  exporter.  In  the  so-called  headquarters  of 
manufacturers'  representatives  the  display  of  American-made 
products  commonly  reminds  one  of  a  junk  shop,  simply  and 
solely  because  samples  are  sent  without  the  slightest  conception 
bi  their  use. 

Exporters  who  write  the  copy  and  prepare  the  layout  of  all 
advertisements  in  local  papers  because  they  fear  that  their 
agents  are  not  advertising  experts,  blindly  ignore  the  fact  that 
dozens  of  good  business  men  can  write  effective  copy  to  one 
who  has  the  peculiar  ability  to  display  samples  to  advantage. 
Display  layout  and  material  is  a  matter  for  an  expert.  There  is 
no  more  reason  why  an  export  manager  or  his  agent  should  be  an 
adept  in  display  than  that  a  casual  checker-player  should  know 
all  the  variations  of  an  intricate  opening. 

Attention-arresting  Values. — The  first  fundamental  of  the 
display  of  samples  by  an  agent  is  that  it  shall  attract  favorable 
attention.     Even  this  primary  objective  is  repeatedly  ignored. 


SAMPLES  IN  EXPORT  SELLING  245 

Favorable  attention  is  not  alone  a  matter  of  immediate  back- 
ground. For  years  there  was  in  Manchester  a  handsomely 
framed  display  of  American  tool  parts  so  hung  that  only  the 
maker's  name  was  distinguishable.  To  know  more  of  the_ 
excellences  of  the  product  would  have  required  the  perilous 
climbing  of  a  12-foot  stepladder!  Similarly,  in  North  Peru 
there  is  a  wonderful  cabinet  of  beautifully  finished  walnut  hidden 
in  a  corner  behind  a  counter.  What  it  holds  no  one  can  tell 
without  invasion  of  sacred  ground. 

Before  the  agent  can  sell,  he  himself  must  be  sold  the  idea  of 
selling.  Before  samples  will  be  adequately  displayed  by  the 
agent  he  must  be  sold  the  importance  of  proper  display,  and  be 
given  both  the  means  and  the  incentive  for  proper  display.  It 
is  not  with  the  idea  of  advocating  elaborate  cabinets  and  other 
display  fixtures  that  this  point  of  "means  of  display"  is  made 
prominent.  It  is  with  the  idea  that,  until  maker  and  agent  work 
intelligently  toward  a  common  end,  the  sample  will  be  lowered 
from  its  high  position  as  a  selling  force. 

Securing  Preferred  Positions. — Display  of  samples  by  the 
wholesaler  frequently  lies  in  the  hands  of  an  employee  seldom 
seen  by  the  salesman,  who  confines  his  attention  to  the  buyer, 
the  management  and  the  clerks  and  salesmen  who  handle  his 
goods.  Abroad,  as  at  home,  there  is  usually  an  employee  who 
cares  for  and  arranges  for  the  displays.  He  is  a  man  well  worth 
knowing.  The  highest  shelves  and  the  darkest  and  most  inac- 
cessible corners  are  rightly  the  portion  of  the  newcomer,  unless 
there  is  some  proved  reason  for  better  treatment  of  samples. 
Old-time  export  salesmen  never  overlooked  this  intensely  human 
side,  and  placed  a  proper  emphasis  on  the  display  of  samples  by 
wholesalers.  They  were  not  averse  to  spending  a  Sunday  with  a 
carpenter  and  the  stock-sample  clerk.  They  knew  the  art 
and  made  it  easy  to  give  their  lines  prominence,  even  when  it 
meant  rolled-up  sleeves,  moving  some  other  line,  piece  by  piece, 
with  the  thermometer  registering  110°. 

One  salesman  of  this  type  guaranteed  an  American  manu- 
facturer two  hundred  displays  in  good  locations  by  just  this  "  strong 
right  arm"  method,  and  added,  "Once  when  I  put  them,  they 
stay  there.  Sample  spaces  I  earned  a  dozen  years  ago  still  carry 
the  same  lines,  changing  only  as  I  change  them."  What  modern 
salesman,  with  all  his  accomplishments  and  all  his  coaching,  can 
truthfully  make  such  a  boast? 


246  EXPORT  MERCHANDISING 

MODERN  DEALER  SAMPLING  CAMPAIGNS 

One  of  the  most  interesting  tests  of  the  vaJue  of  sampling  the 
^j'otailcr  was  conducted  by  a  Massachusetts  manufacturer  during 
1912,  1913  and  1914.  It  is  almost  an  axiom  of  export  selling 
that  for  makers  of  a  wide  range  of  products  the  best  prospective 
customers  are  actual  existing  customers.  As  one  export  manager 
expressed  the  thought:  "  If  we  could  sell  every  one  of  our  present 
dealers  every  one  of  our  pi-oducts,  we  would  have  an  export 
sales  total  beyond  our  fondest  dreams."  The  Massachusetts 
manufacturer  came  to  his  decision  to  test  sampling  his  existing 
customers  because  of  an  elaborate  analysis  which  proved  that 
of  his  seven  hundred-odd  items  in  his  forty-odd  products,  the 
average  number  of  items  purchased  per  customer  was  eighteen, 
divided  among  an  average  of  four  products.  This  highly  sig- 
nificant analysis  opened  his  eyes  to  wonderful  possibilities. 

His  first  step  was  to  design  a  new  type  of  sample  outfit. 
This  was  a  mission  type  case  36  by  24  by  30  inches,  with  a  hinged 
cover  and  ends  and  a  drop  front.  This  case  was  suspended  by 
canvas  straps  in  a  heavily  built  packing  case.  The  interior  case 
was  lined  with  a  heavy  brocaded  silk  that  formed  a  striking  back- 
ground for  the  hundred  samples  which  were  fitted  by  a  "sample 
tailor"  and  held  in  place  by  pockets  and  straps  of  the  brocaded 
silk.  For  all  the  elaborate  fittings,  the  product  itself  was  as 
prosaic  as  shoe  blacking  or  twist  drills.  With  each  outgoing 
order  for  these  three  years  one  of  these  sample  sets  was  sent, 
comment  other  than  this  one  sentence :  "With  your  order  without 
you  will  find  included  a  sample  set  containing  many  items  by 
which  very  possibly  you  can  increase  your  profits." 

Profit  Making  by  Sampling. — The  results  were  far  beyond 
hopeful  anticipation.  It  was  a  commonplace  to  this  maker  to 
have  on  the  first  order  following  receipt  of  the  sample  case  forty 
new  items.  In  only  twenty  cases  out  of  nearly  four  thousand  was 
there  no  proof  in  the  form  of  added  items  that  the  samples  were 
not  wonderful  salesmen.  The  elaborate  sample  cases  in  the  first 
three  years  paid  for  themselves  twenty  times  over. 

There  is  ample  testimony  that  similar  results  are  being  obtained 
by  other  able  export  managers.  The  yearly  investment  in  sam- 
ples of  from  11,000  to  $50,000  by  exporters  with  only  modest  sales 
volumes,  and  their  subsequent  startling  growth,  is  well  known  to 
the  initiated.     One  quiet  export  manager,  in  connection  with  a 


Fig.   16. — The  centuries  meet  in  the  Philippines.     Motor  truck  and  bullock  haul 
away  the  American  Crayon  Company's  products  from  docks  in  Manila. 


Fig. 


17. —  New  England  Valves  in  lionihay's  bazaars.      Walworth   Abinu- 
facturing  Company  demonstrating  its  products  in  India. 


SAMPLES  IN  EXPORT  SELLING  247 

discussion  of  sampling,  had  a  dork  bring  up  files  of  shipping 
orders.  In  one  case,  on  an  initial  order  for  only  $50,  there  was 
included  samples  of  twenty-six  products  costing  over  .|100.  Then 
he  showed  the  repeat  order,  which  included  every  one  of  the 
twenty-six  products  sampled.  The  order  totalled  over  $12,000! 
This  exporter  is  disappointed  if  his  samples  do  not  prove  highly 
effective  in  variety  and  quantity. 

CONSUMER  SAMPLING 

Consumer  sampling  is  an  art  in  itself.  In  export  trade  its 
greatest  and  soundest  use  is  to  create  demand  through  estab- 
lished trade  outlets.  It  is  built  around  the  American  idea  of 
sound  sales  assistance  to  dealers.  It  is  almost  exclusively  and 
certainly  typically  American  to  consider  a  sale  incomplete  until 
the  goods  he  has  sold  a  dealer  are  in  the  hands  of  the  ultimate 
user. 

Example  of  Good  Campaign. — The  details  of  a  campaign  to 
create  consumer  demand  for  the  benefit  of  dealers  in  the  lesser 
markets  of  the  world  are  worth  careful  study.  An  American 
exporting  manufacturer  secured  from  dealer  agents  in  these 
markets  lists  of  the  fifty,  one  hundred  or  three  hundred  leading 
users.  In  each  case  the  name  of  the  buyer  was  given,  as  well  as 
the  firm  name  and  street  address.  For  the  making  of  this  list  the 
dealer  agent  was  paid  five  cents  gold  per  name. 

With  the  first  shipment  following  the  receipt  of  the  list  from 
the  dealer  agent,  a  case  was  sent  containing  the  samples.  These 
were  in  the  form  of  neat  cardboard  boxes,  each  containing  1- 
ounce  bottles.  Each  bottle  was  labelled  in  the  language  of  the 
country  of  destination,  with  text  that  pointed  out  the  peculiar 
merits    of    each    product.     The  box  containing  these  samples 

bore  a  label,  "Samples  presented  with  the  compliments  of . " 

Then  followed  the  dealer  agent's  name  and  address. 

Important  Details. — Each  set  was  wrapped  in  a  heavy  white 
bond  paper  with  the  elaborately  fluted  folds.  It  was  tied  with 
gold  cord.  A  gold-bordered  label  bore  the  typewritten  name 
(not  address)  of  the  consumer,  These  sets  were  arranged  alpha- 
betically in  the  case  and  so  packed,  and  divisions  separated  them 
so  that  any  set  could  be  removed  without  requiring  the  unpacking 
of  the  entire  case.  The  maker  paid  all  freight,  duty  and  other 
charges,  dehvering  the  samples,  free  of  all  cost,  to  the  dealer 
agent's  door. 


248  EXPORT  MERCHANDISING 

The  same  steamer  that  carried  the  samples  also  bore  letters 
under  first-class  postage  to  each  user  whose  name  appeared  on 
the  dealer  agent's  list.  This  described  the  general  line  of  prod- 
ucts made  by  this  manufacturer,  sold  the  idea  of  the  responsi- 
bility of  the  enterprise  and  of  the  size  and  rigid  standards  of  its 
laboratories.  Nothing  was  said  of  the  samples,  for  the  very  good 
reason  that  many  times  and  in  many  places  goods  are  not  cleared 
quickly. 

Interesting  the  Consumer. — The  following  steamer  brought 
the  first  letters  regarding  the  sample.  This  explained  that  owing 
to  postal  regulations  governing  the  transportation  of  liquids  in 
the  mails  it  was  impracticable  to  send  direct  to  them  a  miniature 
sample  set.  So,  the  letter  continued,  they  were  availing  them- 
selves of  the  possibilities  of  service  offered  by  the  presence  of , 

the  dealer.  Indeed,  the  sample  set  for  Sr.  Blanco  had  been 
included  in  a  shipment  to  this  dealer  who  would  gladly  accept 
this  very  letter  as  his  instructions  and  authority  for  giving  the 
set  to  Sr.  Blanco  when  he  called. 

The  enclosure,  in  natural  colors,  showed  the  various  sizes  and 
styles  of  containers  and  tied  up  to  the  letter  by  a  semi-technical 
description  of  each  of  the  three  products. 

The  Agent's  Part. — When  Sr.  Blanco  called  at  the  dealer 
agent's  establishment  and  presented  the  letter  he  was  doubly 
welcome.  He  was  told  that  the  manufacturer  had  written  of  the 
matter  and  that  the  sample  set  was  safely  on  one  of  the  private 
shelves,  from  which  it  w^ould  be  at  once  secured.  The  agent's 
most  effective  clerk  took  advantage  of  the  moments  available 
while  the  sample  set  was  being  brought  to  the  front  of  the  store. 
He  pointed  out  the  attractiveness  and  convenience  of  the  larger 
sizes — using  a  demonstrating  set  of  samples  to  illustrate  his 
points. 

The  sample  set,  purposely  small,  accomplished  three  vital 
tasks : 

1.  To  attract  favorable  consumer  attention 

2.  To  make  the  dealer  co-partner  in  selling  effort 

3.  To  bring  the  user  into  the  dealer's  establishment. 

Following  Up  the  Samples. — By  each  succeeding  steamer  the 
maker  sent,  for  several  months,  either  letters  under  first-class 
postage  or  attractive  bulletins  in  colors.  Two  weeks  after  the 
delivery  of  the  samples  a  well-coached  clerk  was  converted  into  a 
salesman  and  sent  to  ascertain  in  person  the  result  of  the  user's 


SAMPLES  IN  EXPORT  SELLING  249 

tests.  He  carried  on  this  trip  demonstrating  samples  of  other 
products  made  by  the  American  enterprise.  Note  that  samples 
play  a  triple  role  in  this  sales  effort. 

It  is  interesting  to  know  that  in  many  cases  every  single 
sample  was  called  for  in  person.  In  only  one  case  did  less  than 
6  per  cent  fail  either  to  call  for  or  send  for  the  sample  set.  In 
this  one  case  the  dealer  agent  was  responsible  because  he  sent 
the  manufacturer  a  poorly  checked  directory  list.  One  of  the 
most  pleasing  results  came  in  the  dealer  agent's  own  greater 
activity.  This  type  of  campaign,  modest  in  every  way,  never- 
theless has  the  "play  spirit" — a  force  that  sells  more  goods  than 
all  scientific  sales  formulae  ever  invented. 

A  "HEAVY  ARTILLERY"  CAMPAIGN 

This  rapier-like  campaign  can  be  contrasted  with  sampling 
when  used  as  heavy  artillery.  Sampling  can  become  an  alto- 
gether deadly  weapon  in  the  hands  of  an  exporter  willing  to 
place  upon  the  broad  shoulders  of  the  sample  almost  the  entire 
burden  of  the  sales  campaign.  The  product  in  this  second  type 
of  campaign  is  a  patent  cooked  breakfast  food.  This  "heavy 
artillery"  campaign  is  used  in  markets  in  which  many  breakfast 
foods  already  enjoyed  varying  favor.  The  exporter  found  that 
the  dealer  in  a  certain  city  refused  to  become  at  all  enthusiastic 
over  his  portrayals  of  his  breakfast  food.  Not  one  cared  to 
stock  heavily,  so  his  agent — a  manufacturers'  representative — • 
reported.  Price,  quality,  deliveries — not  one  of  these  seemed 
to  offer  any  solution.  Demand  did  not  exist.  No  dealer  cared 
to  aid  in  creating  demand. 

At  first  the  exporter  thought  only  of  advertising.  He  even 
secured  options  on  indoor  and  outdoor  displays,  motion  picture 
privilege  and  newspaper  and  magazine  space.  Soon  he  felt 
that  these  would  be  a  part,  but  only  a  part,  in  the  campaign 
in  which  the  sample  was  to  be  the  dominating  note.  The  agent 
first  of  all  hired  an  able  salesman  who  made  a  flying  house-to- 
house  visit  merely  to  get  names.  To  this  list  he  added  all  hotels, 
restaurants  and  clubs.  He  then  broke  all  his  rules — for  he  was 
strictly  a  manufacturers'  representative — and  placed  a  heavy 
stock  order  to  be  warehoused. 

Mass  Attack. — The  sampling  campaign  did  not  touch  the 
dealer  at  the  beginning.     In  fact,  the  start  was  as  brutal  as  a 


250  EXPORT  MERCHANDISING 

bludgeon.  It  consisted  of  the  delivery,  free  of  all  charge,  of  a 
three  months'  average  supply  to  800  households,  and  of  at  least 
a  two  months'  supply  to  1,200  more  households.  This  was  in  the 
form  of  standard-sized  packages  in  cartons  of  ohe  dozen  packages. 
It  was  regular  stock,  differing  only  in  the  fact  that  each  large 
carton  contained  a  most  attractive  booklet  illustrated  in  four 
colors,  showing  vai'ious  uses  of  the  breakfast  food  and  a  three 
months'  menu  for  the  average  family.  This  contained  many 
receipts  and  coloi'od  reproductions  of  attractive  dishes. 

Immediate  Results. — This  mass  attack  brought  about  two 
important  conditions : 

1.  Immediate  consumer  cessation  from  buying;  breakfast  food 

2.  Gradual  demand  for  the  new  l)reakfast  food  as  samples  were  exhausted. 

When  the  second  stage  could  be  seen  even  in  the  distance, 
the  agent  sent  a  crew  of  consumer  salesmen  to  solicit  orders 
in  behalf  of  the  retail  grocers.  These  men  met  with  the  usual 
success  of  any  good  consumer  crew  in  all  ways  but  one — they 
achieved  an  unequalled  record  for  orders  in  case  lots.  Consumers 
who  had  been  given  from  three  to  a  dozen  cartons  had  been 
taught  to  think  in  large  quantities  and  had  come  to  know  the 
advantages  of  an  ample  stock  on  hand. 

The  breakfast  food  maker's  agent  had  no  difficulty  in  securing 
large  stock  orders  from  dealers  when  he  "turned  over"  these 
consumer  orders.  The  trade  knew  that  demand  for  other 
brands  had  all  but  ceased;  it  knew  that  the  new  breakfast  food 
has  been  called  for  by  name  frequently  for  a  month  past,  and, 
above  all,  they  were  impressed  by  the  size  of  the  orders  from  cus- 
tomers who  ordinarily  bought  breakfast  foods  a  single  package 
at  a  time. 

SAMPLE  REQUESTS  FROM  ADVERTISING 

Every  expoi't  journal  is  thoroughly  cognizant  of  the  low  value 
advertisers  place  upon  consumer  requests  for  samples.  It  is  a 
fact  that  many  exporters,  novices  and  veterans  alike,  consider 
consumer  sample  inquiries  as  valueless  and  do  not  even  acknowl- 
edge them.  Some  exporters  even  object  to  receiving  such 
inquiries  and,  regardless  of  the  number  of  trade  inquiries  re- 
ceived from  an  advertisement,  protest  if  even  a  single  consumer 
sample  request  is  found  in  their  mail. 


SAMPLES  IN  EXPORT  SELLING  251 

Turning  Consumer  Inquiries  into  Dealer  Orders. — As  a  matter 
of  cold,  hard  fact,  one!  of  the  best  tests  of  an  export  manager  is  his 
ability  to  turn  a  consumer  inquiry  into  a  dealer  order.  The 
export  manager  who  fails  to  make  the  attempt  is  indeed  lacking 
in  sales  instinct.  To  prove  this  point,  more  than  a  hundred 
export  managers  in  the  United  States  have  received  long-hand 
letters  written  in  unusual  English,  unusual  Spanish  or  a  mixture 
of  both.  All  of  the  good  export  managers  found  that  the  writer 
of  these  letters  was  the  inmate  of  an  asylum  for  the  feeble- 
minded in  one  of  our  sister  republics.  Only  four  export  managers 
recognized  the  possibilities  of  the  situation,  secured  the  interest 
of  the  asylum  in  their  products,  and  in  the  final  step  secured  an 
order  from  a  pleased  dealer  to  cover  its  annual  requirements. 

The  psychology  of  sampling  is  based  on  the  worth  of  the 
expression  of  confidence  by  a  maker  in  his  products.  This 
expression  reaches  its  height  when  he  says,  "Here  is  my  article. 
It  is  its  own  best  argument  for  your  preference.  You  test  it 
yourself,  under  your  own  conditions.  Test  it  for  excellence. 
Test  it  for  adaptability.  Test  its  profit  margin.  Test  its 
saleability.     Test  it.     We  leave  all  to  your  test." 

An  Illuminating  Experience. — A  manufacturer  of  shoe  ma- 
chinery received  an  in(iuiry  from  a  large  English  shoe  manu- 
facturer for  samples  and  quotations  on  a  revolving  knife  used  in  a 
certain  machine.  The  letter  stated  that  they  were  using  a 
knife  made  by  a  German  maker  which  was  giving  them  fair 
satisfaction,  but  that  they  hoped  to  secure  better  knives,  better 
prices,  or  both.  The  letter  promised  prompt,  full  and  rigid 
tests  of  any  samples  sent. 

The  American  maker  had  a  knife  that  even  after  hard  use 
really  cut  and  not  tore  the  leather.  It  was  most  decidedly 
better  than  the  German  product  and  rightly  commanded  a 
higher  first  price.  In  length  of  life,  as  well  as  in  character  of 
work,  it  excelled  to  such  an  extent  that  any  shoe  manufacturer 
could  easily  afford  to  pay  the  price  rather  than  pay  one-third  the 
price  for  the  German  article.  While  the  export  manager  knew 
this  from  repeated  tests,  he  sent  to  his  "competitor's  museum" 
for  two  German  knives  which,  like  his  own,  bore  no  brand  name 
except  on  the  envelope  in  which  each  was  packed. 

In  sending  the  samples,  a  side-by-side  test  was  urged.  The 
American  was  most  modest  in  his  claims.  It  was  not  a  large 
order  that  resulted.     The  letter  which  accompanied  the  order 


252  EXPORT  MERCHANDISING 

explained  the  reason.  While  the  English  shoe  manufacturer 
admitted  that  the  American  knife  was  better  and  worth  the  price, 
he  felt  a  trial  order  wise,  because  the  price  was  higher  and  only 
barely  counterbalanced  by  the  points  mentioned  in  the  letter. 

Capitalizing  a  Mistake. — Immediate  suspicions  proved  cor- 
rect. The  wrong  samples  had  been  sent.  The  export  manager 
had  asked  the  English  shoe  maker  to  test  the  German's  own 
samples  out  of  his  "museum"  against  exactly  the  same  knife. 
But  because  of  his  confidence  (as  shown  in  his  letter)  the  English 
maker,  even  in  a  side-by-side  test,  had  seen  what  he  had  been 
told  he  would  see.  Needless  to  relate,  the  order  was  filled  with 
American  knives,  and  the  further  tests  urged  proved  so  clearly 
the  advantage  that  the  American  manufacturer  earned  their 
entire  business. 

Use  of  Advertising  Coupons. — One  of  the  most  effective  export 
advertising  campaigns  of  a  decade  ago  was  based  squarely  on  the 
worth  of  sampling.  One  well-remembered  full  page  advertise- 
ment, which  was  always  run  on  a  right-hand  page,  gave  the 
entire  right  quarter  of  the  page  to  coupons  calling  for  samples. 
Four  of  the  eight  coupons  were  for  consumer's  use  and  called 
for  liberal  sample  sizes  in  return  for  the  equivalent  of  thirty  cents 
gold  in  postage  stamps  of  the  country  of  the  sender.  Thousands 
of  these  coupons  were  returned,  some  ten  years  after  the  original 
advertisement  appeared. 

Four  of  the  eight  coupons  offered  samples  to  dealers.  These 
samples  were  sent  prepaid  and  without  charge  when  coupons 
were  accompanied  by  the  dealer's  letterhead  or  business  card. 
The  surprising  result  of  this  offer  was  the  calibre  of  dealers  that 
sent  in  the  coupons.  Particularly  in  Latin  America,  some  of  the 
most  important  importers,  enterprises  with  millions  of  capital 
and  in  at  least  one  case  a  century  of  history  of  square  dealing, 
used  these  coupons  for  test  samples. 

The  third  and  separate  offer  used  in  this  campaign  was  to  send 
an  elaborate  sample  set  with  goods  having  a  retail  value  of  $15, 
absolutely  free,  f.o.b.  export  steamer.  New  York.  As  this 
sample  set  required  only  about  4  cubic  feet,  it  was  suggested  in 
the  advertisement  that  the  sample  set  be  included  with  other 
goods  coming  forward  via  New  York.  The  only  restriction  in 
regard  to  the  offer  was  the  statement  that  it  was  intended  for 
dealers  in  the  mentioned  products  or  dealers  willing  to  consider 
seriously  the  re-sale  of  such  products.     As  a  matter  of  history. 


SAMPLES  IN  EXPORT  SELLING  253 

the  sample  set  was  sent  in  every  case  where  a  dealer  accompanied 
the  coupon  with  his  letterhead  or  business  card. 

Results  of  Tests. — It  will  be  interesting  to  those  giving 
increasing  attention  to  the  use  of  samples,  to  note  how  many 
sets  were  sent  in  response  to  this  type  of  advertisement?  Seventy 
sets  were  sent  direct  in  response  to  the  first  full  page  in  Magazine 
"A."  Repeated  in  a  half-page  space  a  month  later,  over  eighty 
requests  were  received.  A  year  later,  the  same  full  page  in  the 
same  magazine  drew  well  over  two  hundred  twenty  responses. 

The  most  valuable  part  of  the  "$15  sample  set  campaign" 
came  through  the  securing  of  decidedly  worth-while  customers  in 
many  interior  cities.  In  at  least  seventy  cases  these  names  were 
not  so  listed  in  any  trade  directory  as  to  be  listed  even  for  the 
broadest  of  circularization  campaigns.  Any  five  of  these  seventy 
dealers  thussecured  have  since  bought  in  large  enough  quantities 
so  that  the  profit  from  their  purchases  would  cover  the  entire  cost 
of  the  early  advertising.  One  of  the  "  coupon  senders  "  is  now  the 
valued  agent  of  the  manufacturer.  Another  is  a  sub-agent 
covering  a  much  neglected  market.  A  third  specializes  on  gov- 
ernment orders  in  his  country,  and  his  activities  have  led  to  a 
special  government  formula  which  is  the  year-in  and  year-out 
exclusive  property  of  the  manufacturer.  It  is  almost  a  per- 
petual conti'act. 


A  COUPON  SAMPLING  CAMPAIGN 

The  original  full-page  advertisement  had  eight  coupons 
attached.  The  upper  four  coupons  were  the  consumer  coupons. 
By  distinguishing  the  hne  mildly  as  "toilet  preparations," names 
can  be  given  the  four  coupons — "Bay  Rum,"  "Violet  Water," 
"Full  bloom  Rose  Talc,"  "Sandal  Incense  Soap."  The  sample 
sizes  of  each  of  these  four  regularly  retail  in  the  United  States 
for  ten  cents. 

The  exporter's  first  step  was  to  offer  these  ten-cent  samples  for 
thirty  cents.  The  extra  twenty  cents  paid  for  mailing  case,  pack- 
ing, postage  and  clerical  expense.  It  also  freed  dealers  already 
stocked  from  grounds  for  criticism,  a  point  which  can  well  be 
emphasized. 

These  four  consumer  coupons  required,  in  addition  to  the 
price  of  the  samples: 


254  EXPORT  MERCHANDISING 

1.  Sender's  name 

2.  Sender's  address 

3.  Dealer's  name 

4.  Dealer's  city. 

Securing  Dealers'  Names. — In  the  rare  cases  when  a  consumer 
sent  his  thirty  ('(Mits  in  stamps  and  his  coupons  with  his  own  name 
and  address,  but  without  dealer's  name  and  city,  the  consumer 
was  writt(ui,  and  written  again,  until  the  name  was  forthcoming. 
Out  of  the  literally  thousands  of  consumer  coupons  which  came 
to  the  exporting  manufacturer  as  part  of  the  campaign,  less  than 
ten  cases  ultimately  refused  to  give  "name  of  dealer." 

By  the  same  mail  that  carried  the  consumer's  samples  an 
identical  set  went  to  the  dealer  mentioned,  unless  the  dealer 
was  not  only  already  a  customer  but  also  had  all  four  products 
in  stock  from  recent  orders.  The  consumer  was  urged  to  test 
the  samples  "thoroughly  and  critically  in  direct  comparison 
to  the  brands  formerly  his  favorites."  If  convinced,  he  was  to 
ask  his  dealer  to  carry  them  "so  that  in  the  future  he  (the  con- 
sumer) might  secure  promptly  his  entire  needs  in  , 

and  —  from  a  nearby  source  of  supply." 

Dealer  Arguments. — To  the  dealer,  the  exporter  presented  a 
compelling  argument.  "Here  on  one  hand  is  John  Jones  of 
your  city  who  has  read  our  advertisement  and  hopes  in  our 
products  to  find  satisfaction.  Here  you  are — a  critical  buyer. 
Both  of  you  are  now  testing  samples  of  four  of  our  many  products. 
Kindly  ask  Mr.  Jones  the  results  of  his  tests,  should  you  desire 
to  know  the  decision  of  a  typical  user  interested  in  toilet  prepara- 
tions. His  tests  and  your  tests  will  show  (thus  and  so).  It  is 
these  tests,  plus  proofs  of  our  service  to  other  dealers,  that  cause 
us  to  look  forward  to  your  favorable  decision." 

In  this  concrete  example  it  is  easy  to  see  the  direct  relation 
between  the  consumer  inquiry  and  the  dealer  order.  It  is  easy 
to  see  in  it  the  essentials  in  sampling  consumers — the  quick  shift 
and  simultaneous  sales  attack  which  capitalizes  consumer 
approval. 

SAMPLING  THROUGH  EXPORT  COMMISSION  HOUSES 

Because  of  the  lack  of  understanding  of  the  function  of  the 
export  commission  house,  exporting  manufacturers  have  given 
the   possibilities  of  sampling  little  attention  in   their  indirect 


SAMPLES  IN  EXPORT  SELLING  255 

exporting.  To  meet  exactly  the  needs  of  the  export  commission 
house  field,  a  highly  successful  campaign  has  been  in  action  now 
for  eight  years,  involving  a  single  manufacturing  exporter  and  a 
score  of  the  largest  and  best-rated  export  commission  houses. 
The  export  manager  of  the  Eastern  manufacturer  in  analyzing  his 
"indirect"  sales  by  items  and  territories,  found  that  importers 
buying  through  export  commission  houses  confined  their  pur- 
chases to  three  types — standard  staples,  advertised  specialties 
and  advertised  assortments.  This  average  of  items  was  one- 
fifth  of  the  number  appearing  on  orders  for  the  same  cities  where 
direct  solicitation  was  involved. 

Planning  the  Campaign. — The  export  manager  prepared  tabu- 
lations by  shipping  marks  proving  this  point.  With  these — plus 
a  plan — ^he  went  to  New  York.  His  plan  involved  the  gift  of  a 
$25  set  of  samples  with  every  order  calling  for  the  goods  of  his 
enterprise.  It  called,  also,  for  the  free  offer  of  this  $25  set  to  all 
customers  of  the  export  commission  house  who  handled  similar 
lines.  Beyond  this,  it  called  for  the  direct  solicitation  by  the 
manufacturer  of  orders  through  the  export  commission  house, 
thus  placing  the  sales  ))ur(lon  for  this  line  where  it  belonged — 
on  the  manvifacturer. 

Because  each  detail  of  the  plan  had  been  perfected  before  it 
was  presented,  it  was  accepted  just  as  it  was  presented.  The 
export  commission  houses,  once  it  was  proved  that  their  interests 
were  protected  by  a  house  of  proved  square  dealings  and  by  a 
fool-proof  system,  did  not  hesitate  to  work  hand  in  hand,  even 
to  the  extent  of  writing  their  customers  urging  them  to  take 
advantage  of  the  offer,  and  further  urging  them  to  secure  their 
full  profit  by  ordering  in  great  variety  from  the  wide  range  of 
samples. 

Securing  Contact  with  Outlets  Abroad. — This  simple  but 
direct  sampling  campaign  has  increased  the  manufacturer's 
indirect  sales  ten-fold — and  their  indirect  sales  were  substantial 
at  the  outset.  This  sampling  campaign  has  placed  him  in 
direct  touch  with  buyers  previously  known  to  him  only  as  a 
symbol  on  a  packing  case.  This  contact  has  led  to  the  sending 
of  sales  helps.  It  has  led  to  displays  which  have  quickened 
demand.  It  has  changed,  also,  his  whole  relation  with  export 
commission  houses,  who  now  feel  it  profitable  to  turn  to  him  for 
sales  development  all  orders  received  where  brand  is  not  specified. 

Backing  up  the  Samples. — It  must  be  remembered  that  while 


2r)()  Kxi'oirr  mi<:hciiam)Isis(; 

a  sample  is  a  salesiiuiu  in  itself,  the  salesman  is  silent,  and  that 
to  use  its  powers  to  the  greatest  possible  extent  its  virtues  must 
be  pointed  out  by  the  spoken,  the  printed  or  the  written  word. 
Tlic  sample  and  the  other  selling  forces  supplement  each  other. 
Take  such  products  as  perfumes  and  food  products.  The  most 
that  the  salesman,  the  advertisement  or  the  letter  can  do  is  to 
create  overwhelming  desire  for  them.  Where  the  question  of 
taste  enters  this  task  is  tremendous  without  the  full  proof  which 
is  possible  only  by  sample. 

The  sample  is  not  exclusively  a  consumer  weapon,  nor  is  it 
exclusively  a  dealer  weapon.  It  can,  of  course,  be  used  to 
convince  the  consumer  of  the  advantages  of  the  product  and  may 
also  convince  the  dealer  as  a  consumer.  But  its  real  function  is 
to  prove  to  the  dealer  the  certainty  of  profit  which  the  goods  will 
bring  on  re-sale. 

When  the  question  of  convenience  in  use  is  an  important  one, 
no  volume  of  description  can  compete  with  the  sample,  which 
offers  the  argument  of  demonstration.  The  best  of  salesmen, 
with  articles  of  this  nature  can  scheme  out  ways  and  means  to 
place  the  sample  in  the  dealer's  hands,  figuring  rightly  on  the 
very  human  trait  of  curiosity.  It  is  doubly  important,  when  the 
sales  effort  is  deprived  of  the  salesman's  services,  that  the  sample 
l)c  present  to  speak  for  itself. 

When  to  Use  Samples. — It  can  be  laid  down  as  a  safe  rule,  if  a 
product  possesses  any  (juality  which  a  sample  will  demonstrate, 
and  if  the  cost  of  placing  the  sample  in  the  hands  of  the  distrib- 
uting trade  and  the  ultimate  user  is  not  prohibitive,  that  this 
method  of  selling  should  be  employed. 

The  sample  is  a  tangible  sales  argument.  It  is  speechless, 
yet  its  presence  answers  questions,  so  that  it  becomes  a  salesman 
in  itself.  The  confidence  of  the  maker  who  is  willing  to  stand  or 
fall  on  his  own  handiwork  is  compelling  in  sales  force.  If  a 
product  permits  the  gift  of  samples,  the  exporter  should  capitalize 
his  good  fortune.  If  it  compels  the  sale  of  samples,  the  best 
sales  brains  should  be  placed  on  the  task.  If  samples  cannot  be 
given  or  sold  to  the  ultimate  user,  every  effort  should  be  made  to 
make  it  seem  and  be  to  his  interest  to  inspect  them — and  make  it 
as  easy  as  possible  to  inspect  them. 

The  Sample  as  a  Mirror. — There  is  no  one  way  in  which  to 
build  world  trade  more  rapidly  than  by  judicious  use  of  the 
sample.     It  lends  itself  admirably  to  combination  with  the  efforts 


SAMPLES  IN  EXPORT  SELLING  257 

of  salesmen,  correspondence  and  advcitising.  The  sample  is  in 
many  ways  more  nearly  the  reflection  of  the  enterprise  than  even 
the  salesman  himself. 


17 


CHAPTER  XXIII 
THE  TESTIMONIAL  IN  EXPORT  SELLING 

"Ask  the  man  who  owns  one." — Packard  Motor  Car  Company. 

The  Important  Place  of  the  Testimonial  in  Overseas  Sales.  Eight  Distinct 
Uses  of  the  Testimonial  in  Introducing  Manufacturer  to  Importers  Abroad. 
References  but  Postponed  Testimonials.  Testimonial  Letters.  Financial 
Statements.  A  Novel  Use  of  Testimonials  in  Connection  ivith  Fourteen 
Features  in  Execution  of  Orders.  Quality  of  Product  Proved  through  Words 
of  Users.  What  Constitutes  Quality?  Difficult  Selling  Points  Made  Effective 
by  Use  of  Evidence  of  Others.  Use  of  Testimonial  by  Automobile  Manufac- 
turers. Re-sale  Profit  Proved  by  Testimony  of  Dealers.  Examples  of  Skilled 
Uses  of  Testimonials  on  Non-tangibles. 

The  most  neglected  sales  force  in  exporting  is  the  testimonial. 
Beyond  the  early  use  by  the  proprietary  medicine  group  it  is 
not  only  neglected  but  also  practically  unknown.  Yet  it  is  a 
compelling  force.  It  is  the  opinion  of  a  disinterested  third  party 
and  carries  with  it  the  weight  of  the  testimony  of  an  impartial 
witness.  The  technique,  the  tactics  and  the  strategy  of  the 
overseas  use  of  the  testimonial  are  in  their  infancy.  There  is  a 
wonderful  opportunity  for  the  exporter  who  will  learn  to  use 
and  then  to  employ  the  testimonial  as  an  integral  part  of  his 
sales  attack. 

Reference  Testimonials. — In  the  very  openings  of  relations 
in  international  commercial  exchange  the  testimonial  earns  a 
definite  place.  It  is  as  important  for  the  new  exporter  to  give 
references  as  to  ask  for  references.  There  is  no  more  reason  for 
the  importer  abroad  to  change  his  source  of  supply  until  he  is 
convinced  of  the  reliability  of  the  exporter  than  for  the  exporter  to 
grant  credit  until  he  knows  of  the  importer's  right  to  credit. 
The  importer  abroad  has  a  right  to  know  the  standing  of  the 
exporter  from  unprejudiced  third  parties,  just  as  the  exporter 
has  the  right  to  know  of  the  importer's  reputation  for  prompt 
payment. 

There  are  many  angles  from  which  the  testimonial  can  be  used 
in  export  trade.     Testimonial  treatment  can  prove: 

258 


THE  TESTIMONIAL  IN  EXPORT  SELLING  259 

1.  Business  morality 

2.  Financial  rosponsihilily 

3.  Knowledge  of  export  te(rluii(}ue 

4.  Correct  execution  of  orders 

5.  Quality  of  product 

6.  Profit  from  re-sale  of  jn-oduct  or  use  of  product 

7.  Assistance  in  sales  of  th(>  product 

8.  Equitable  adjustment  of  claims. 

Domestic  Beginnings. — Many  maniifacturors  have  thought- 
lessly assumed  that  their  reputation  for  lousiness  morality  was  a 
matter  of  world-wide  acceptance  because  of  their  well-earned 
standing  in  the  domestic  market.  Many  other  firms  have  been 
so  long  established  in  our  home  markets,  and  their  honesty  has 
for  so  man}^  years  been  such  a  matter  of  common  knowledge, 
that  they  have  forgotten  their  domestic  beginnings.  If  these 
will  but  examine  their  earliest  days  they  will  find  that,  directly 
or  indirectly,  they  supplied  proofs  of  their  commercial  integrit}" 
before  they  made  forward  strides. 

The  indirect  use  of  the  testimonial  in  exporting  to  prove 
business  morality  is  not  uncommon.  This  is  merely  the  giving 
of  the  names  of  lianks  and  mercantile  agencies  as  references. 
Such  "references"  are  no  more  than  postponed  testimonials. 
When  the  references  are  consulted  the  replies  are  out-and-out 
testimonials.  While  replies  may  touch  upon  other  matters, 
they  must  give  testimony  to  business  morality  or  fail  to  fidfil 
their  purpose.  The  very  existence  of  an  enterprise  over  a  long 
term  of  years  is  one  excellent  proof  of  commercial  morality,  for 
the  dishonest  can  seldom  show  long-continued  life  under  the 
same  name  and  in  the  same  location. 

Character  Letters. — Direct  testimonial  letters  can  come  in 
the  form  of  letters  from  export  institutions  and  organizations, 
local  and  national  trade  bodies  and  from  individuals  and  enter- 
prises which  enjoy  international  reputation.  It  is  unusual  to 
employ  direct  testimonial  letters  which  relate  to  connnercial 
honesty  alone.  It  is  unusual  to  use  such  letters  in  advertise- 
ments or  as  enclosures.  A  large  American  mail  oi'd(>r  house 
prints  on  the  back  of  its  letterheads  the  names  of  banks  and  other 
institutions  in  foreign  countries  where  information  may  be 
obtained.  The  best  example  of  the  use  of  character  figures  in  ex- 
port selling  is  furnished  by  a  Middle  Western  manufacturing  ex- 
porter. This  corporation  in  replying  to  price  inquiries  encloses 
complete  references,  and  in  addition  states  that  the  imjioi-tcr  will 


2G0  EXPORT  MERCHANDISING 

receive  separately  letters  which  will  establish  his  right  to  be 
considered  a  desirable  source  of  supply. 

Before  this  manufacturer  attempted  export  sales  he  became 
a  member  of  the  leading  export  organizations.  His  enterprise 
studied  export  trade  and  adopted  the  best  methods  known  to 
exporting.  After  years  of  hard  work  they  became  expert. 
Then,  and  only  then,  they  felt  entitled  to  the  recognition  as 
experts.  Documentary  proof  of  their  commercial  integrity  was 
prepared  from  the  entire  list  of  their  three  thousand  wholesale 
outlets  in  the  United  States.  Their  finances  were  made  a 
matter  of  sworn  record.  Their  knowledge  of  exporting  was 
proved  by  exhibits.  This  testimony  was  forwarded  for  the 
inspection  of  the  organizations  in  which  they  were  members. 
Based  upon  this  data  these  organizations  were  in  a  position  to 
write  prospective  customers  of  this  manufacturer  a  testimonial 
letter  which  was  an  international  proof  of  Ijusiness  morality — 
and  more. 

Capital  Resources. — Financial  responsibility  enables  those 
with  business  honesty  to  carry  out  their  obligations.  It  proves 
the  abihty  to  fulfill  plans  and  promises.  One  New  England 
manufacturing  exporter  goes  to  an  excellent  extreme  in  the  use 
of  the  testimonial  abroad  upon  this  point.  His  first  step  is  his 
semi-annual  financial  statement.  This  is  impressive  in  itself, 
as  the  resources  are  high  in  the  millions.  This  statement  is 
accompanied  by  the  sworn  audit  of  a  firm  of  international 
accountants.  This  sworn  audit  is  more  than  a  mere  statement 
of  the  correctness  of  the  figures.  It  is  a  testimonial  to  the 
excellent  financial  condition  of  the  New  England  manufacturer. 
It  explains  the  statement  and  emphasizes  the  items  which  prove 
the  reserve  strength  of  the  enterprise.  The  financial  statement 
and  the  accompanying  audit  are  mailed  twice  each  year  to  every 
export  customer.  Needless  to  add,  these  documents  are  used  as 
enclosures  in  writing  prospective  customers.  This  is  an  excellent 
example  of  the  testimonial — for  the  auditor's  letter  is  a  pure 
testimonial — in  establishing  financial  responsibility. 

Obviously,  w^hen  using  this  type  of  testimonial,  which  is  based 
upon  the  unsupported  statement  of  the  exporter  plus  copy  of  an 
audit,  great  care  should  be  taken  to  support  this  evidence  so  that 
the  legitimate  exporter  may  in  no  way  permit  himself  to  be 
confused  with  the  illegitimate  exporter.  It  is  entirely  con- 
sistent with  dignity  to  support  statements  and  audits  with  evi- 


THE  TESTIMONIAL  IN  EXPORT  SELLING  261 

(lenco  which  is  clearly  outside  the  direct  control  of  the  exporting 
manufacturer.  Such  evidence  will  leave  no  room  for  the  doubter 
overseas  to  feel  disinclined  to  accept  at  face  value  every  claim 
made  by  the  exporter. 

Technical  Knowledge  Emphasized. — ^Knowledge  of  export 
technique  includes  such  a  wide  range  of  subjects  that  one  testi- 
monial is  hardly  sufficient  to  accomplish  the  full  purpose  of  proof 
through  the  expressed  experience  of  others.  One  manufacturer 
of  long  export  experience  uses  twenty  exhibits  to  prove  conclu- 
sively his  authority  on  technique.  Eight  of  these  exhibits  testify 
to  the  personal  knowledge  of  the  export  staff  as  proved  by 
tangible  contributions  to  export  forms  and  practices.  These 
include  letters  from  export  organizations  in  the  United  States 
and  Europe  acknowledging  receipt  of  model  forms  and  exposition 
of  methods,  and  expressing  pleased  approval  of  their  value.  The 
balance  of  the  testimonials  are  letters  from  customers  in  many 
parts  of  the  world  which  relate  directly  to  the  exporter's  knowl- 
edge of  technique.  These  refer  to  such  matters  as  savings  in 
duties  by  correct  but  different  classifications,  assistance  in  secur- 
ing correct  damages,  better  methods  in  draft  usage,  refunds  on 
transportation  charges  and  unusual  routings  to  expedite  deliver- 
ies. These  twenty  exhibits  are  all  loose-leaf  facsimiles  of 
the  original  typewritten  letters,  and  are  bound  in  an  attractive 
cloth  cover. 

Testimonials  which  cover  the  correct  execution  of  orders 
are  of  decided  value  to  American  exporters.  Rightly  or  wrongly, 
there  is  a  feeling  in  many  foreign  markets  that  American  manu- 
facturers are  not  the  equal  of  European  exporters  in  the  execution 
of  indents.  This  truth  was  recognized  years  ago  by  a  manu- 
facturer in  Ohio  who  enjoys  the  respect  of  11,000  customers 
abroad  and  who  rightly  wished  to  use  his  hard-earned  reputation 
to  increase  his  sales  with  others. 

Analysis  of  Order  Procedure. — This  exporter  analyzed  the 
execution  of  the  order  and  felt  it  desirable  to  cover  by  testi- 
monials these  major  features: 

1.  Correctness  in  entering  items  on  order 

2.  Pricing 

3.  Terms  of  sale 

4.  Drafts  and  draft  forwarding 

5.  Insurance  and  insurance  rates 

6.  Consular  papers 

7.  Classifications  and  declarations 


202  EXPORT  MERCHANDISING 

8.  Interior  packiiif!; 

9.  Exterior  packiiiji; 

10.  Crating,  strapping  and  marking 

11.  Invoicing 

12.  Placing  documents  on  same  vessel  as  goods 

13.  Securing  ocean  space  for  first  available  sailing 

14.  Obtaining  favorable  freight  rates. 

The  testimonial  letters  from  his  foreign  customers  (which  were 
obtained  by  a  semi-questionnaire)  were  classified  to  cover  these 
fourteen  divisions  and  published  for  distribution  to  both  prospec- 
tive and  actual  customers.  Each  page  of  the  book  was  a  photo- 
graphic reproduction  of  the  letterhead  used  by  the  customer 
abroad.  The  book  itself  was  a  master  testimonial  that  was  proof 
positive  that  the  exporter  was  thoroughly  reliable  in  the  execu- 
tion of  every  phase  of  the  export  shipment. 

Quality  Proved  by  Testimonials. — Many  American  exporters 
use  testimonials  of  some  type  in  relation  to  the  quality  of  their 
products.  These  vary  from  a  single  phrase  in  quotation  marks 
(with  no  authority  given  for  the  quotation)  to  far  more  elaborate 
and  effective  testimonials.  One  common  testimonial  in  auto- 
mobile lines  was  based  upon  government  awards  for  excellence  in 
Iniilding  Liberty  motors  during  the  War.  English  manufacturers 
in  their  domestic  and  foreign  trade  use  the  testimonial  phrases, 
"as  supplied  to  H.R.H.  .  .  .,"  "Purveyors  to  H.R.H.  .  .  ." 
and  other  similar  indirect  testimonial  endorsements.  Years  ago 
a  few  American  manufacturers  engaged  in  foreign  trade  attempted 
to  capitalize  the  use  of  their  products  by  the  United  States 
Government,  but  this  is  no  longer  permissible. 

Proprietary  medicine  makers  particularly  in  Latin- America  and 
the  Far  East,  have  used  the  testimonial  letter  effectively.  This 
use  has  been  largely  in  their  advertisements  in  local  newspapers, 
but  it  has  also  included  the  use  of  poster  advertising  and  circulars 
and  booklets  enclosed  within  the  cartons  of  the  individual  pack- 
ages. Even  the  familiar  patent  medicine  almanac  alternating 
testimonials  and  monthly  calendars  and  predictions  is  long 
established  in  fields  outside  the  United  States — notably  in 
China. 

Unusual  Endorsements. — The  experience  of  the  careful 
merchandiser  at  home  and  abroad  has  long  since  proved  that 
testimonials  of  quality  of  a  product  are  too  valuable  to  be  left 
solely  to  the  field  of  proprietary  medicines.     The  publishing 


THE  TESTIMONIAL  IN  EXPORT  SELLING  2G3 

field  supplies  excellent  examples.  Two  presidents  of  the  United 
States  have  been  quoted  testimonially  to  prove  the  quality  of 
interest  in  detective  stories.  Letters  from  the  leaders  of 
American  business  have  been  used  to  promote  the  sale  of  edu- 
cation by  correspondence  schools.  Book  reviews  are  but  another 
name  for  testimonials — and  certainly  in  theatrical  circles  the 
dramatic  critic  as  a  testimonial-maker  is  the  first  thought  of  the 
producer. 

"Quality  of  product"  is  a  phrase  which  covers  many  factors. 
Loosely  used  and  without  testimonial  proof,  it  means  more  to- 
day to  the  seller  than  it  does  to  the  buyer.  The  testimonial 
is  of  especial  value  in  connection  with  "quality  of  product" 
because  it  tends  to  reduce  glittering  generalities  such  as  "Best 
in  the  World"  to  the  specific  points  which  are  susceptible  of 
definite  presentation.  In  exporting,  the  American  must  always 
remember  that  every  generality  is  the  subject  of  suspicion.  It  is 
far  better  not  to  claim  excellent  quality  than  to  claim  without 
some  proof. 

Sixteen  Elements  in  Quality. — Quality  of  product  may  lie  in: 

1.  Grade  of  materials 

2.  Type  of  materials 

3.  Chemical  skill 

4.  Mechanical  skill 

5.  Personal  skill 

6.  Patented  methods 

7.  Secret  methods. 

In  addition  to  these  seven  factors  which  relate  directly  to  the 
"quality"  of  a  product,  it  is  usual  to  include  loosely  in  this 
classification  the  related  phases: 

1.  Container  which  preserves  original  quality 

2.  Convenience  of  container 

3.  Convenience  of  product 

4.  Comfort 

5.  Luxury 

6.  Economy 

7.  Appeal  to  any  of  the  senses 

8.  Effect  of  use 

9.  Hidden  qualities. 

With  these  specific  divisions  before  the  exporter,  a  wide  range 
is  opened  for  testimonial  use.  Quality  of  raw  materials  in 
comparison  to  the  raw  materials  used  by  competitors  is  proved 
by  a  West  Virginia  manufacturer  through  the  sworn  testimony 


2G4  EXPORT  MERCHANDISING 

of  eoinniercial  laboratdries.  The  standing  of  these  laboratories, 
naturally  not  generally  known  abroad,  is  proved  by  a  second 
sworn  testimonial.  Similarly,  the  type  of  raw  materials  used  is 
made  into  a  selling  point  by  an  Indiana  exporter  who  publishes 
abroad  testimonials  to  the  use  of  an  internationally-known  type 
of  bearing  on  a  device.  Competitive  devices  use  a  less  expensive 
and  less  satisfactory  type  of  bearing.  One  automobile  manu- 
facturer uses  testimonial  letters  which  apparently  prove  the 
advantage  of  his  use  of  a  certain  steel  alloy  on  a  part  of  his  car — 
something  which  no  other  motor  car  in  his  price  range  offers. 

Chemical  and  Mechanical  Skill  Proved. — Chemical  skill  in 
preparation  is  an  excellent  field  for  the  use  of  the  testimonial. 
The  quality  of  two  products  made  from  identical  materials  may 
differ  widely  because  of  the  greater  chemical  skill  of  one  maker. 
"Your  chemists  are  to  be  congratulated  on  this  striking  and 
epochal  process  .  .  .  "  is  the  opening  sentence  of  a  testimonial 
used  in  his  foreign  selling  by  a  New  Jersey  varnish  maker.  Sworn 
tabulations  showing  the  presence  of  certain  elements  form  the 
basis  for  excellent  testimonials.  "  Caffein-less "  cofTee,  "9944;{qq 
per  cent  pure"  soap,  "contains  no  alum,"  are  famihar  domestic 
examples — all  of  which  are  used  by  the  same  makers  in  their  sales 
efforts  abroad. 

It  is  common  to  claim  mechanical  skill.  The  testimonial 
changes  the  claim  into  an  acceptable  type  of  proof.  A  maker 
may  claim  to  use  the  height  of  mechanical  skill,  but  it  is  the 
results  of  this  skill  rather  than  the  claimed  use  that  has  greater 
selling  power.  The  testimony  to  accuracy  by  the  leading  ob- 
servatories of  the  world  is  of  decided  value  to  the  maker  of 
astronomical  instruments.  The  testimonial  of  savings  through 
use  of  a  mechanically  correct  machine  belt  outranks  any  claim 
for  excellence  of  the  machines  that  made  the  belt.  The  testi- 
mony of  a  national  automobile  association  to  the  length  of  time 
a  gasoline  motor  ran  without  a  miss  has  sales  power,  regardless 
of  domestic  boundaries. 

Personal  Skill  of  Workers. — The  testimonial  which  portrays 
personal  skill  in  preparation  of  product  is  still  all  but  unused  in 
export  selling.  It  is  alarmingly  easy  to  claim  personal  skill  for 
workers — and  most  hard  to  prove  it  by  convincing  testimonials. 
It  is  a  matter  of  world  knowledge,  for  example,  that  the  heritage 
of  skilful  workmanship  in  shoes  is  an  asset  to  Brockton,  in 
collars  and  shirts  to  Troy  and   in   cutlery  to  Sheffield.     Yet 


THE  TESTIMONIAL  IN  EXPORT  SELLING  205 

individual  nuiiiufaciuici-s  invariably  find  cxtronic  difficulty  to 
prove  personal  skill  in  preparation  for  their  own  operatives. 
One  manufacturer  whose  product  is  similar  (if  not  identical)  in 
appearance  with  a  dozen  competitive  products  has  succeeded  in 
overcoming  all  obstacles  to  this  use  of  the  testimonial  in  export 
selling.  Because  personal  skill  in  preparation  is  his  greatest 
advantage,  he  features  this  point  in  all  his  foreign  sales 
efforts. 

His  first  testimonial  is  that  of  an  industrial  physician  whose 
letter  compares  most  favorably,  from  a  physical  and  mental 
standpoint,  the  personnel  of  the  workers  with  workers  in  all 
other  industries.  Then  is  given  a  letter  from  the  editor  of  a 
business  magazine  congratulating  the  president  of  this  enterprise 
on  the  remarkable  record  of  service  of  his  foremen — an  average 
service  of  fifteen  years  with  an  average  age  of  forty.  The  third 
testimonial  consists  of  diplomas  and  medals  won  by  this  makei's 
products  for  workmanship  and  design.  The  final  exhibit  is  a 
series  of  letters  from  users  of  the  product  praising  various  tjuali- 
ties  which  are  the  result  of  personal  skill  of  the  worker  rather 
than  material  or  chemical  or  mechanical  reasons. 

Worth  of  Patented  Processes. — Patented  methods  of  prepara- 
tion form  a  strangely  neglected  opportunity  for  testimonials. 
All  but  a  few  manufacturers  are  content  to  state  the  nature  of 
their  patents  and  the  ends  they  achieve.  Patented  methods  are 
valuable — or  valueless — as  they  result  in  advantage — or  lack  of 
advantage — to  the  user — not  merely  because  they  are  patented. 
If  a  patented  method  has  advantage,  it  can  easily  be  made  the 
subject  of  a  testimonial.  One  of  the  most  effective  testimonials 
used  in  export  trade  to  prove  the  value  of  patented  methods 
is  the  motion  picture  film  of  the  Pneumatic  Scale  Corp.  of  Nor- 
folk Downs,  Massachusetts.  This  pictorial  testimonial  shows 
the  acceptance  of  the  patented  advantages  of  their  packaging 
machinery  by  leaders  in  American  industry. 

From  tobacco  to  traveling  cranes,  from  tooth  paste  to  tele- 
phone systems,  patented  methods  in  preparation  of  product 
lend  themselves  to  effective  testimonial  treatment. 

Use  of  Secret  Methods  of  Preparation  Capitalized. — In  the 
field  of  secret  methods  of  preparation  the  testimonial  must  be  in 
regard  to  the  effect  rather  than  to  the  cause.  This  self-evident 
fact  is  ignored  in  exporting  by  those  who  attempt  to  make  a 
selling  argument  out  of  a  veil  of  mystery.     "Our  machinery 


266  EXPORT  MERCHANDISING 

is  all  (losi^iKMl  hy  our  own  mechanical  exports,  who  arc  under 
bond  not  to  disclose  .  .  .  "  is  the  claim  made  in  one  export 
('ami)aijin.  "The  secret  of  our  colors  lies  in  the  brains  of  only 
two  men  .  .  ."  is  a  similar  statenuMit.  Both  of  these  examples 
are  clearly  inferior  to  the  open  use  of  the  testimonial  which  relates 
to  the  effect  of  the  use  of  the  secret  process.  The  outstanding; 
example  of  such  a  testimonial  is  the  letter  used  by  a  New  York 
maker  and  written  by  a  government  official  in  Europe.  "The 
Blank  print  made  by  your  secret  process  fulfills  our  requirements. 
It  is  the  only  preparation  we  have  been  able  to  obtain  that 
would  withstand  the  climate  of  one  of  our  principal  possessions 
in  the  Pacific."  This  ounce  of  testimony  is  worth  a  pound  of 
unsupported  or  prejudiced  claim. 

Basing  Testimonials  on  Containers. — One  maker  whose  export 
sales  are  larger  than  his  domestic  sales  has  made  an  interesting 
test  of  the  value  of  the  testimonial  as  a  selling  force.  His  product 
is  one  of  everyday  consumption.  His  sales  argument  is  the 
container  which  he  uses  to  preserve  the  original  quality  of  the 
product — an  argument  similar  to  the  familiar  domestic  presenta- 
tion of  "In-er-seal"  packing  of  crackers,  the  Wrigley  packing  of 
chewing  gum  and  the  paraffin-sealed  wrappings  on  Kellogg's 
Toasted  Corn  Flakes. 

This  maker  in  his  export  selling  tested  the  mechanical  proof 
of  the  worthwhileness  of  his  packing  against  the  testimonial 
proof  of  results  of  the  packing.  He  found  that  both  his  trade 
outlets  and  consumers  abroad  responded  more  quickly  to  the 
testimonial  which  portrayed  the  condition  of  the  product  and  its 
greater  effectiveness  in  use  because  of  the  container  that  pre- 
served the  original  quality  than  to  the  "reason  why"  advertise- 
ment without  the  testimonial  flavor. 

Comfort  and  Convenience. — Convenience  of  product  in  use 
and  comfort  of  product  in  use  are  natural  subjects  for  testi- 
monials. The  best  examples  in  export  selling  are  to  be  found 
in  the  office  furniture  and  shoe  industries.  The  method  of 
obtaining  and  using  such  testimonials  is  so  apparent  that  no 
discussion  is  needed.  Luxury  in  use  is  a  far  more  difficult  prob- 
lem from  the  standpoint  of  the  export  executive  who  desires 
testimonial  treatment.  It  is  human  to  want  luxury  but  unnat- . 
ural  to  prepare  testimonial  letters  admitting  luxury  except  in 
connection  with  other  qualities.  A  pleasing  solution  in  export 
selling  is  that  of  an  automobile  manufacturer  who  relies  upon 


THE  TESTIMONIAL  IN  EXPORT  SELLING  267 

tostiinonial  letters  from  women  to  prove  the  luxury  and  from 
men  to  prove  the  economy  of  his  $8,000  closed  motor  car. 

There  is  a  wonderful  opportunity  for  exporters  in  skilful  use 
of  the  testimonial  as  an  appeal  to  the  senses.  The  phonograph 
and  the  self-playing  piano  are  today  sold  abroad  by  the  testi- 
monial method.  French  perfume  makers  are  adroit  in  testi- 
monial treatment  of  a  score  of  toilet  preparations.  Similarly, 
the  "They  satisfy"  cigarette  advertising  at  home  is  a  type 
effective  in  testimonial  use  abroad.  In  Latin  America  the 
pictorial  testimonial  of  the  child  enjoying  the  taste  of  medicine 
and  various  prepared  foods  needs  the  expansion  of  the  adult. 
That  it  can  Ijc  done  is  shown  by  the  current  advertisement  of 
bacon  and  devilled  ham. 

The  sense  of  feeling  need  not  be  confined  to  the  testimonial, 
"The  skin  you  love  to  touch"  illustration.  Today,  hammers 
and  saws  are  sold  abroad  on  their  "balance,"  their  "hang,"  and 
fountain  pens  on  their  "feel."  Even  stabilizers  for  light  auto- 
mobiles and  shock  absorbers  can  well  and  easily  be  sold  by 
testimonials — the  word  of  the  satisfied  user.  "  Feel  the  quality," 
as  a  bond  paper  slogan,  gains  weight  by  the  suggestion  of  proof 
in  the  testimonial  letter.  The  Motometer  relies  upon  sight  for 
its  sales  motive,  just  as  an  automobile  which  is  equipped  with 
it  may  claim  to  be  "The  Most  Beautiful  Car  in  America." 
Yet  both  in  their  export  selling  may  well  depend  far  more  on 
outside  opinion  by  the  testimonial  which  says,  "Even  in  a  driving 
snowstorm  I  can  easily  see  whether  or  not  my  engine  is  over- 
heating" or  "The  lines  and  finish  of  my  car  stood  comparison 
throughout  a  year's  driving  in  Europe  with  the  triumphs  of 
English,  French  and  Italian  cars  costing  twice  the  amount  I 
paid  for  my  Paige." 

Proving  Economies. — Economy  in  use  shoukl  clearly  be  proved 
from  the  experience  of  the  buyer,  not  from  the  theory  of  the 
seller.  This  principle  is  well  recognized  in  selling  at  home,  and 
its  application  deserves  a  wider  use  in  foreign  fields.  In  the 
automotive  world  the  ubiquitous  Ford,  the  Franklin  and  the 
Indian  motorcycle  have  used  this  argument,  and  the  Franklin 
has  abroad,  as  at  home,  used  the  "mass  testimonial" — the  expe- 
rience of  many  owners — to  lead  its  sales  argument.  Next  to  the 
automobile  the  belting  industry  leads  in  the  use  of  this  type 
of  testimonial  in  its  export  field.  The  early  history  of  the 
leading  office  equipment  devices  is  full  of  testimonials  of  economy 


268  EXPORT  MERCHANDISING 

in  use  which  compared  the  savings  of  time  of  the  typewriter 
and  of  the  adcUng  machine  over  long-liand  methods. 

The  Reverse  Testimonial. — Check  protectors  in  export  selhng 
use  the  ''reverse  testimonial "  in  test  of  both  letters  and  advertise- 
ments by  personal  proofs  of  dangers  of  the  unprotected  check. 
This  "effect  of  use  "  testimonial  is  the  backbone  of  the  proprietary 
medicine  industry.  But  it  applies  with  equal  force  to  the  display 
cabinets,  safes,  roofings,  paints  and  varnishes  ("Save  the  surface 
and  you  save  all"),  lightning  rods,  silos — thousands  upon 
thousands  of  articles  and  processes  which  demonstrate  by  use 
their  right  to  exist.  The  testimonial  is  by  far  the  most  logical 
argument  in  foreign  fields  for  articles  and  processes  in  this  class. 
Those  who  fear  for  their  dignity  need  only  be  reminded  of  the 
Packard  motto,  "Ask  the  man  who  owns  one,"  which  is  the 
delayed  testimonial  pure  and  simple. 

Hidden  qualities  such  as  non-fading  color  in  a  window  shade, 
permanence  in  a  writing  fluid  and  the  bore  in  a  rifle  demand  the 
proof  which  can  only  come  from  the  user  who  has  seen  these 
hidden  qualities  develop  under  actual  service  conditions.  Mere 
assertion  is  customary  in  the  domestic  field  in  many  lines  and 
succeeds  because  the  enterprise  itself  is  known.  Overseas,  with 
the  many  markets,  large  and  small,  unfamiliar  with  a  maker's 
products,  it  is  decidedly  unwise  to  trust  such  an  important  factor 
to  assertion. 

Profit  to  Buyer. — The  most  important  sales  argument  is  profit 
from  re-sale  or  use  of  the  product  offered.  Many  American 
makers  constantly  err  in  producing  mathematical  proof  of  the 
per  cent  of  profit  on  a  single  sale,  overlooking  entirel}^  the  entire 
factor  of  turnover.  Little  testimony  is  needed  to  prove  profit 
on  the  percentage  basis.  Testimony  is  the  only  fair  proof  of 
true  profit,  which  is  based  squarely  upon  rapidity  of  sale.  This 
point  is  covered  excellently  by  one  American  manufacturer.  He 
presents  in  a  booklet  excerpts  from  letters  from  dealers  from 
Alaska  to  South  Africa,  Bermuda  to  Siberia.  These  relate 
solely  to  the  profit  on  re-sale  of  his  product.  Great  emphasis  is 
laid  upon  the  turnover,  which  is  exceptionally  rapid  on  his  line. 

Makers  of  vending  machines  lead  the  way  abroad  in  the  use  of 
testimonials  proving  the  profit  to  users  of  their  product. 
National  Cash  Register  has  consistently  used  the  testimonial 
idea  to  prove  the  profit — by  saving — to  the  user.  Similarly, 
makers  of  motion  picture  projectors  have  been  quick  to  capitalize 


THE  TESTIMONIAL  IN  EXPORT  SELLING  2(;i) 

the  success  in  profit-making  of  those  wlio  have  used  their  devices 
— and  motion  pictures  are  today  one  of  the  important  industries 
abroad  as  well  as  in  the  domestic  field. 

In  the  export  house  organ  of  a  Pennsylvania  manufacturer  of 
toilet  preparations  there  appears  each  month  a  testimonial  letter 
from  some  foreign  customer  which  shows  his  appreciation  of  the 
sales  assistance  rendered  b}^  the  manufacturer.  These  letters 
are  reprinted  and  used  as  enclosures  with  correspondence.  This 
maker  bases  his  foreign  sales  campaign  squarely  on  good  products, 
sound  policy  and  unusual  assistance  to  the  dealer  in  sales  de- 
velopment. His  emphasis  on  the  assistance  he  is  prepared  to 
render  is  the  listing  of  the  forms  of  dealer  sales  promotion  he  is 
prepared  to  offer  and  testimonial  letters  which  show  the  success 
dealers  abroad  have  won  from  the  cooperation. 

Opinion  of  Customers  Tests  Policies. — One  of  the  greatest 
handicaps  of  the  distances  inevitable  in  foreign  trade  is  the  doubt 
which  naturally  exists  in  the  buyer's  mind  in  regard  to  claims. 
No  product  is  so  excellent,  no  service  so  accurate  that  ample 
opportunity  for  claims  may  not  arise.  Even  the  most  righteous 
and  financially  responsible  of  exporters  may  be  narrow  minded  in 
his  adjustments  from  the  viewpoint  of  the  average  buyer  abroad. 
Surely  the  exporter  is  not  the  one  to  judge  of  the  fairness  of  his 
adjustments!  No  one  neglected  phase  of  the  use  of  the  testi- 
monial deserves  better  attention.  The  best  way  to  use  the 
opinion  of  others  on  this  vital  point  is  to  recognize  the  importance 
of  testimony  from  customers  outside  the  United  States  and  to 
make  sure  in  each  adjustment  the  customer's  acknowledgment 
is  saved  for  this  very  purpose. 

The  only  objection  that  can  be  raised  to  the  use  of  the  testi- 
monial in  selling  goods  abroad  is  its  one-time  abuse  in  domestic 
markets.  This  is  an  extremely  poor  excvise.  The  testimonial  in 
some  form  is  employed  today  by  the  proudest  of  houses.  It 
need  not  be  lacking  in  dignity  in  its  use  at  home  or  abroad. 


CHAPTER  XXIV 

PLANNING  EXPORT  SALES  ON  A  BASIS  OF  TEN  -YEAR 
DEVELOPMENT 

"Good  exporters  tliink  iti  dcfadrs  ;ind  eenturies." 

— Morton  K.  Morton. 

Estimate  of  Number  of  Manufaciuriiig  Exporters  in  United  States  and 
Per  Cent,  with  Adequate  Overseas  Representation.  Inadequate  Attention 
Given  Exporting  Proved  Costly.  Exporting  is  Selling  the  Whole  World. 
Balanced  Export  Sales  Effort  Portrayed.  Examples  of  Decade  Schedule  of 
Export  Developments.  Charting  the  World  on  a  Ten-year  Basis.  The 
Twenty-six  Territorial  Divisions  Used  as  a  Base  by  One  Manufacturer. 
Visualizing  Export  Conditions  and  Sales  by  Charts  and  Graphs.  Balanced 
World-wide  Sales  Cannot  Result  by  Chance. 

Well-balanced  world-wide  sales  are  never  a  matter  of  luck. 
The  world  is  so  large  and  its  markets,  large  and  small,  are  so 
many,  that  only  by  careful  planning  is  correct  export  develop- 
ment made  possible. 

There  are  fully  30,000  manufacturing  exporters  in  the  United 
States,  an  estimate  which  checks  with  the  official  statistics  and 
the  investigations  of  export  organizations.  Not  over  seventy- 
five  manufacturers — ^one-quarter  of  one  per  cent — ^can  rightfully 
claim  adequate  representation  in  even  all  the  major  markets  of 
the  world.  Not  over  one  hundred  and  fifty  can  prove  that  their 
export  selling  in  both  theory  and  practice  is  based  upon  plans 
laid  years  ahead. 

This  is  a  tremendous  indictment.  It  charges  American  ex- 
porting with  lack  of  forethought  as  well  as  lack  of  balanced  export 
sales.  Examine  the  facts — for  it  is  facts  and  not  opinions  only 
which  are  worth  consideration. 

Balanced  Planning  Rare. — There  cannot  be  a  self-sufficient 
exporting  manufacturer.  He  must  keep  himself  in  touch  with 
the  details  of  export  technique.  He  must  secure  at  least  a  part 
of  needed  information  from  some  export  bureau  or  organization, 
or  he  must  secure  it  from  text  books  and  the  Exporters'  Ency- 
clopedia. Even  if  he  is  not  directly  connected  with  any  organiza- 
tion he  is  known  to  those  who  are  interested  in  our  national 
problem  of  a  large  and  sounder  export  trade.     Thus  we  can 

270 


EXPORT  SALES  ON  A  TEN  YEAR  BASIS  271 

speak  with  approximate  certainty  for  all  exporters  and  with 
absolute  certainty  for  such  an  overwhelming  percentage  that  the 
untraceable  balance  cannot  offset  the  conclusion. 

In  Boston,  New  York,  San  Francisco,  Baltimore,  New  Orleans, 
Los  Angeles  and  Philadelphia — seven  seaboard  cities — ^in  St. 
Louis,  Chicago,  Buffalo,  Nashville,  Springfield,  Detroit  and 
Cleveland — seven  large  inland  cities — and  in  a  list  of  over  a 
hundred  cities  such  as  Worcester,  Akron,  Bridgeport,  Portland, 
Maine,  Portland,  Oregon,  Harrisburg  and  Mobile — there  cannot 
be  found  only  a  comparative  few  who  measure  up  to  both  correct 
practice  and  balanced  distribution  in  their  export  selling. 

Domestic  Comparisons. — Yet  in  these  cities  there  can  be  found 
hundreds  of  manufacturers  with  a  clean-cut  policy  built  to  result 
to  best  advantage  in  the  domestic  market.  The  conclusion  is 
obvious.  American  manufacturers,  including  the  vast  majority 
of  those  who  have  export  sales,  are  not  interested  in  export 
trade  to  the  point  of  considering  it  worthy  of  the  same  executive 
attention  which  is  given  to  domestic  trade.  Against  this  handi- 
cap, a  handful  of  good  export  managers  have  successfully  com- 
peted single-handed.  Because  there  are  executives  with  an 
interest  in  and  an  understanding  of  exporting,  a  few  score  more 
manufacturers  are  entitled  to  blue  ribbons.  Because  of  the 
untiring  work  of  the  leading  organizations  of  export  executives  a 
few  score  more  enterprises  have  advanced  from  mediocrity  to  a 
ranking  position. 

Basis  of  Correct  Effort. — There  is  no  mystery  in  correct 
export  planning.  It  is  based  upon  exactly  the  same  hard  com- 
mon sense  that  has  marked  the  development  of  selling  within 
the  United  States.  It  is  a  process  easily  understandable  and  not 
wasteful  in  operation.  It  appeals  to  the  cold-blooded  for  its 
profit-making  possibilities.  It  appeals  to  the  technician  for  its 
thoroughness.  It  appeals  to  the  man  of  vision  because  it  takes 
him  to  the  very  limits  of  his  powers. 

Exporting  is  selling  the  whole  world.  This  truth  must  be 
accepted  before  progress  is  possible.  Until  a  manufacturer 
is  willing  to  think  of  selling  abroad  wherever  a  profit  can  be 
shown,  he  is  certainly  not  entitled  to  be  called  an  exporter,  even 
if  his  ledgers  show  sales  in  Cuba  and  in  China.  A  few  scattered 
customers  in  foreign  countries  are  no  more  a  proof  of  exporting 
than  a  few  freckles  prove  a  man  a  Mongolian. 

The   outstanding   error   in   American   exporting   lies    in    the 


272  I'jxroirr  merchandising 

beginner's  usual  question,  "Where  shall  we  first  sell  abroad?" 
The  proper  question  is,  "What  method  can  be  adopted  which 
will  logically  bring  about  balanced  export  sales?"  Exporting— 
modern  scientific  exporting — is  far  more  than  attempting  to 
sell  one  market  at  a  time  sequenced  in  order  of  each  of  securing 
sales.  Such  a  method  is  exactly  as  absurd  as  for  an  enterprise 
which  desired  national  distribution  in  the  United  States  to  work 
forward  one  state  at  a  time,  with  no  advance  survey  or  prepara- 
tion of  the  entire  field. 

Profits  Not  Sole  Test. — There  are  many  American  manu- 
facturers who  are  today  enjoying  a  pleasing  profit  from  export 
sales,  built  up  in  crude  ways.  But  these  are  the  first  to  admit 
that  such  methods  have  robbed  them  of  both  earlier  and  larger 
profits,  and  that  today  export  distribution  is  still  "spotty"  and 
without  correct  balance.  The  mere  fact  that  there  are  many 
profiting  by  export  trade  is  no  proof  that  greater  profits  should 
not  have  been  made  and  that  future  efforts  will  not  be  decidedly 
handicapped  by  the  hit-or-miss  methods  that  forgot  the  future 
by  too  close  a  focus  on  the  present. 

The  world  is  large.  Therefore,  the  first  step  of  the  prospective 
exporter  should  be  to  admit  that  he  has  before  him  a  task  worthy 
of  his  best  brains  and  demanding  the  most  careful  and  skilful 
planning.  Before  active  export  selling  starts,  there  should  be  a 
world  plan  which  is  based  on  a  knowledge  of  the  world  and  its 
markets  and  a  vision  of  a  decade  in  advance.  It  is  costly  to 
ignore  this  concept  of  exporting.  Countless  American  manu- 
facturers have,  by  ignoring  this  basic  foundation,  entered  into 
agency  relations  that  within  a  few  years  proved  to  block  their 
future,  not  alone  in  the  particular  countries  in  which  they 
appointed  agents,  but  in  entire  continents. 

EXAMPLE  OF  LOSSES 

One  illustration  will  drive  home  this  important  point.  A 
New  York  manufacturer  of  paints,  because  he  had  no  plan 
covering  his  expoi't  futvu-e,  gave  the  agency  for  one  of  his  products 
to  an  agent  in  Rio;  the  agency  for  all  of  his  products  for  Argentina 
to  a  representative  in  Buenos;  the  Chilian  agency  for  a  paint 
remover  to  a  wholesaler  and  retailer  in  Valparaiso,  and  the 
agency  for  varnishes  to  a  retailer  in  Lima.  Contracts  pro- 
hibited the  paint  manufacturer  from  selling  other  than  agents. 


Fig.   is. — United  States  Steel  Products  Coiiipaiiy  employs  unique  liausporta- 
tion  methods  in  South  America.     Packing  traction  rope  over  a  mountain  trail. 


Fig.   19. — ^Native  bearers  carrying  tnuk  cable  over  the  Andct. 


EXPORT  SALES  ON  A  TEN   YEAR  BASIS  273 

What  was  the  result?  It  is  well  to  note  that  a  business 
crime  had  been  committed.  First  of  all,  any  manufacturer  of  a 
broad  line  of  products  who  desires  agency  representation  should, 
of  course,  avoid  giving  an  agenc}'-  for  any  one  of  his  products 
where  he  is  not  entirely  certain  of  the  wisdom  of  such  an  act. 
In  the  case  under  examination,  the  paint  maiuifacturer,  ])y  giving 
the  exclusive  agency  for  his  automobile  paints  to  a  dealer  in  Rio 
for  a  term  of  ten  years,  found  himself  two  years  later  unable  to 
interest  the  one  most  desirable  agency  connection  in  Rio.  This 
corporation  in  Rio  refused,  naturally,  to  divide  the  agency  with 
a  small  and  little-known  dealer  in  its  own  city. 

Handicapping  the  Future. — In  other  countries  the  same  general 
result  came  from  the  same  general  cause — blocked  efforts,  due  to 
failure  to  plan.  The  agencies  granted  made  it  impossible  to  send 
a  traveler  profitably,  since  the  traveler  could  only  have  visited 
to  advantage  Uruguay,  Paraguay,  Bolivia  and  Ecuador,  due  to  the 
agencies  and  the  conditions  under  which  they  were  conducted. 
In  a  sentence,  it  can  be  said  that,  by  failure  to  plan,  the  paint- 
maker  set  back  his  sound  development  in  South  America  by  at 
least  twenty  years. 

Even  students  of  exporting  have  all  too  often  failed  to  grasp 
the  situation.  One  theory  of  exporting  advocates  confining 
selling  effort  to  the  easiest  markets — the  ones  in  which  at  the 
moment  general  conditions  are  most  favorable.  This  narrow 
doctrine  of  expediency — interesting  and  simple  as  it  may  sound — 
is  an  infallible  recipe  for  later  regrets.  The  prospective  exporter 
who  is  afraid  to  face  the  fact  that  this  is  a  large  world,  or  who  is 
unable  or  unwilling  to  give  adequate  time  to  advance  planning  for 
his  commercial  conquest  of  it,  had  best  remain  confined  to  domes- 
tic selling. 

Normal  vs.  Intensive  Selling. — There  is  a  vast  difference 
between  advance  planning  for  an  ultimate  world-wide  and 
balanced  trade  and  an  attempt  to  conduct  an  intensive  world- 
wide selling  campaign  from  the  very  start.  Only  enterprises 
with  exceptional  financial  resources  can  attempt  wisely  any 
foreign  trade  effort  which  involves  the  simultaneous  attack  on  a 
large  number  of  markets  before  the  working  capital  is  earned 
by  a  more  modest  entry  into  exporting.  Conversely,  it  is 
entirely  possible  for  any  manufacturer,  adequately  financed  for 
domestic  trade,  to  plan  correctly  for  ultimate  world-wide  trade 
and  to  proceed,  step  by  step,  directly  toward  his  goal. 

18 


274  EXPORT  MERCHANDISING 

PLANNING  ON  TEN-YEAR  BASIS 

The  exiiini nation  of  a  typical  case  will  illustrate  sound  methods. 
While  the  name  of  the  product  and  the  enterprise  are  fictitious, 
the  plans  portrayed  are  a  cross-section  of  actual  American  busi- 
ness. It  is  well  to  go  back  to  the  beginning  and  note  the  exact 
manner  in  which  the  experienced  export  manager  who  was 
selected  to  build  up  an  export  trade  laid  out  his  ten-year  schedule. 

American  Toilet  Preparations,  Inc.,  was  established  in  1846. 
Up  to  1919  it  had  no  export  trade  other  than  a  factory,  sales 
office  and  warehouse  in  Toronto,  and  an  occasional  order  from  a 
New  York  exportcom  mission  house.  Its  development  in  seventy- 
three  years  had  been  east,  west,  north  and  south,  from  its  middle- 
western  headquarters.  Its  Canadian  factory  was  a  natural  step 
when  an  increase  in  duties  made  it  more  profitable  to  supply  its 
Canadian  trade  by  "made-in-Canada"  goods — but  the  orders 
were  all  taken  by  its  domestic  sales  staff  except  for  city  salesmen 
in  Montreal  and  Toronto. 

Reason  for  Exporting. — The  domestic  sales  total  of  American 
Toilet  Preparations,  Inc.,  in  1918  was  $1,500,000,  not  including 
$200,000  in  Canadian  sales.  The  period  inevitable  in  every 
growing  enterprise  had  arrived  when  added  domestic  sales  cost 
more  than  the  normal  sales  per  cent.  The  president  had  for 
years  known  the  possil)ilities  open  through  export  sales,  but  had 
wisely  awaited  the  period  in  which  he  could  see  not  only  production 
available  for  export  sales,  but  also  a  sound  reason  for  desiring 
export  sales  deeply  enough  to  be  willing  to  earn  them. 

When  the  time  came,  in  1919,  he  engaged  at  a  high  salary  the 
best  export  manager  he  could  secure.  The  president  made  it 
clear  that  the  new  export  manager  was  to  proceed  deliberately 
to  become  acquainted  with  the  products  of  American  Toilet 
Preparations,  Inc.,  the  domestic  prices  and  selling  policies, 
and  the  reasons  behind  each.  When  this  ground-work  was 
completed  the  president  asked  that  a  definite  set  of  recommenda- 
tions and  sales  plans  be  submitted.  It  is  a  fragment  of  this  report 
— the  fragment  which  relates  to  the  charting  of  the  entire  world 
of  a  ten-year  basis — and  the  general  outline  of  the  sales  treatment 
on  each  division  that  is  here  portrayed. 

CHARTING  THE  WORLD 

The  export  manager's  charting  is  by  territories  rather  than 
by  the  familiar  continents — an  arrangement  which  makes  it 
infinitely  easier  to  follow: 


EXPORT  SALES  ON  A    TEN   YEAR  BASIS  275 

1.  United  States — Domestic  territory  except  see  Alaska,  Porto  Pico, 
Hawaiian  Islands  and  the  Philippines. 

2.  Canada — PJ21-192()  domestic  salesmen  plus  city  salesmen  in  Toronto 
and  Montreal. 

3.  Newfoundland — Cover  by  domestic  salesmen  with  Boston  head- 
quarters; ship  from  Boston  or  New  York  warehouses. 

4.  Bermuda — Cover  and  ship  from  New  York  warehouses  by  New  York 
salesman. 

5.  Bahamas — Cover  by  domestic  salesman  whose  territory  includes 
South  Atlantic  States. 

6.  Alaska — Cover  by  "far  west  salesman  3" — whose  territory  includes 
Washington. 

7.  The  Guianas — Mail  Territory  No.  1 — for  ten  years  except  visits  by 
Gulf  salesman  from  Trinidad  to  Georgetown.  Exclusive  agencies  established 
by  mail  in  French  and  Dutch  Guiana  in  1921.  British  Guianas  held  open 
until  first  visit  of  salesman,  scheduled  as  possibility  in  1922  or  1923. 

8.  Gulf  Territory — Cuba,  Porto  Rico,  Haiti,  Dominica,  all  islands  in 
Gulf  of  Mexico,  Venezuela,  Colombia,  Panama,  all  Central  America  and 
Mexico. 

9.  Mexico — Border  towns  covered  by  domestic  salesmen  from  Texas, 
Arizona,  New  Mexico  and,  at  start.  West  Coast  Mexico  from  Los  Angeles 
by  domestic  salesman  and  jobbers. 

10.  Southern  South  America — Ecuador,  Bolivia,  Chile,  Argentina, 
Paraguay,  Uruguay,  Brazil — covered  by  export  salesman  No.  2.  1921- 
1926,  annual  trips.  1927-1931,  permanent  headquarters  for  salesman  in 
Argentina,  with  warehousing  facilities.  1926-1931,  Ecuador  added  to  Gulf 
territory. 

11.  South  America — Interior  cities,  such  as  Manaos,  form  mail  territory 
No.  2  for  direct  "  all-by-mail "  selling,  with  or  without  exclusive  agency 
treatment. 

12.  British  Isles — Export  Salesman  No.  3,  with  headquarters  in  London. 
1921-1926,  indent  orders  only.  1927-1931,  warehousing  facilities.  1932 
— Branch  house. 

13.  European  Russia — Details  for  building  sales  plan  to  be  secured  in 
1921  and  filed  ready  for  adaptation  when  conditions  make  sales  campaign 
advisable. 

14.  Norway  and  Sweden,  Denmark — Export  Salesman  No.  4.  1921, 
trip  to  include  appointment  of  local  short-time  agents.  No  natioiuxl  agent 
to  be  appointed  until  complete  analysis  of  possibilities  based  on  actual  sales' 
experience,  is  completed.     1927-1931,  probably  one  agent  in  each  country. 

15.  Iceland — Mail  Territory  No.  3.  Handle  direct  "all-by-mail"  from 
United  States,  not  from  Copenhagen,  because  of  known  wholesaler  who 
wishes  direct  factory  connection. 

16.  Holland — Belgium — France — Spain — Portugal — Switzerland — Italy 
— Morocco — Tunis — Algiers — Export  Salesman  No.  ii.  All  plans  to  be 
based  on  1921  tour  of  investigation.  Rough  plan  to  include  agents  in 
each  country,  plus  stock  of  certain  staples  in  Brussels. 

17.  Germany — Austria — Ultimately  to  become  territory  for  Export 
Salesman  No.  6.  Warehouse  and  other  plans  postponed  until  conditions 
clear  and  production  increases  to  point  necessitating  maximum  export  sales. 


270  EXPORT  MERCHANDISING 

18.  "New  Europe" — Czccliu-alovakia,  I'oluiid,  Balkans,  uti;. — Mail 
Territory  No.  4.  Export  manager  personally  to  keep  in  closest  touch 
possible  through  government  export  bureaus  and  export  organizations. 

19.  European  Turkey,  Egypt,  Greece — 1921-192(),  Mail  Territory  No.  5, 
unless  conditions  make  it  wise  to  include  in  territory  of  "'Around  the  World 
Salesman"  in  place  of  South  Africa  q.  v. 

20.  Persia,  Afghanistan,  Palestine,  ^Mesopotamia — Mail  Territory  No.  6. 
Agency  treatment  for  entire  ten  j'ears. 

21.  Australasia;  Australia,  Tasmania,  New  Zealand — 1921-1924,  Mail 
Territory  No.  7.  1924-1926,  Export  Salesman  No.  6  on  "Around-the- 
World"  trip.     1927-1931,  Export  Salesman  No.  7,  resident  in  Sydney. 

22.  Hawaiian  Islands — Philippines— China— Indo-China— Straits  Settle- 
ments— New  Guiana — ^Dutch  East  Indies — Siam — Burma — India  Proper — 
Ceylon — -1921-1926,  Export  Salesman  No.  7  on  "  Around-the- World " 
trip.  1927-1931,  Export  Salesman  No.  7,  aided  by  one  or  two  junior 
salesmen  working  in  the  interest  of  established  trade. 

23.  British  South  Africa — 1921-1924,  Export  Salesman  No.  7  in  "Around- 
the- World"  trip,  or  covered  by  mail  in  1921  and  1922  and  trip  by  British 
Isles'  salesman  in  1921  to  establish  five-year  agency. 

24.  Africa — not  included  in  (16j,  (19)  and  (23) — -Mail  treatment,  includ- 
ing five-year  agencies. 

25.  Asiatic  Russia — 1921-1922,  Mail  treatment  onl\-.  1924,  accept 
arrangement  for  three  years  offered  by  San  Francisco  export  commission 
house  with  branch  in  Vladivostok.  1928-1931,  sales'  development  plans 
based  on  general  conditions  in  Russia  and  sales  volume  secured  through 
San  Francisco  export  commission  house. 

26.  Isolated  markets,  such  as  the  Azores,  Canary  Islands,  Madagascar — 
Mail  treatment  with  or  without  agencies. 

CRITICISM  OF  DIVISIONS 

This  is  merest  outline  of  the  sales  plan  of  this  export  manager. 
Many  of  the  divisions  which  required  long  and  careful  thought, 
by  no  means  indicate  at  first  glance  the  logic  of  their  selection. 
While  it  would  hardly  be  probable  for  another  product  to  require 
these  identical  divisions,  there  is  food  for  thought  for  every  export 
manager,  veteran  or  novice,  in  this  layout.  By  use  of  an  outline 
map  of  the  world  the  export  manager  can  easily  plot  out  his  own 
divisions  in  one  contrast  color  ink,  and  this  outline  in  another 
color  ink,  which  will  aid  greatly  in  the  comparison. 

There  are  some  very  interesting  touches  included  in  this  laj^out, 
and  several  rather  obvious  comments  omitted  from  the  written 
draft.  The  covering  ofNewfound  land  from  Boston  is  sound 
practice.  It  might  be  well  in  many  enterprises  to  have  the  sales- 
man covering  New  England  make  the  "triangle,"  to  include  the 
Maritime  Provinces,  Newfoundland,  and  then  sail  direct  to  Ber- 


EXPORT  SALES  ON  A  TEN-YEAR  BASIS  277 

luuda,  returning  via  New  York.  The  covering  of  Nassau, 
Bahamas  by  the  South  Atlantic  salesman  and  Alaska  from  Wash- 
ington or  by  Pacific  Coast  jobbers,  shows  that  the  plan  originated 
with  an  export  veteran.  Likewise,  the  covering  of  Mexican  bor- 
der towns  from  Texas,  New  Mexico  and  Arizona  and  Southern 
California  (Mexico)  from  Los  Angeles  is  good  technique. 

Nature  Gate-way  Overlooked.^ — The  most  glaring  omission 
is  the  covering  of  Afghanistan  from  Karachi,  the  highly  wise  point 
of  attack  as  well  as  sound  port  of  entry.  The  salesman  covering 
India  proper  can  well  afford  at  least  one  "visit  to"  Karachi  for 
this  reason  alone. 

It  is  to  be  noted  that  the  plan  of  the  export  manager  for 
"American  Toilet  Preparations,  Inc.,"  lists  seven  export  sales- 
men and  seven  "mail  territories."  Two  more  "missionary 
salesmen"  for  the  1927-1931  period  are  also  mentioned  for 
Territory  22 — "  Around-the-World "  trip.  One  of  the  seven 
salesmen  (No.  7)  is  also  in  the  1927-1931  class  to  follow,  in 
Australia,  the  trade  steps  of  Salesman  No.  6 — the  "Around-the- 
World"  man.  The  "Isolated  Markets"  form  an  eighth  "  Mail 
Territory." 

Thoroughness  and  Flexibility. — The  export  manager's  plans 
are  unquestionably  both  modest  and  sound.  They  call  for  six 
export  salesmen  to  be  secured,  trained  and  sent  out  in  the  first 
five  years,  and  three  more  in  the  second  five  years.  The  plans  call 
for  a  very  substantial  sales  effort  by  mail — but  this  is  so  laid 
out  that  it  can  be  developed  hand-in-hand  with  the  development 
of  export  correspondents.  The  plan  is  sufficiently  complete  so 
that  no  important  market  is  overlooked,  and  no  minor  market 
entirely  neglected.  Conversely,  the  plan  is  not  so  rigid  as  to 
demand  too  much  in  the  first  two  years  or  to  bring  unwise  pres- 
sure on  the  newly-created  export  workers.  The  flexibility  of  the 
plan  is  one  of  its  great  assets.  While  it  weighs  the  possibilities 
of  every  market,  it  by  no  means  insists  that  sales  development 
in  each  market  shall  be  intensive  from  the  start. 

The  export  manager's  plan  does  not  tie  his  hands  with  exclusive 
arrangements  except  where  agency  representation  is  the  logical 
sales'  treatment.  It  is  the  one  sound  preventive  of  the  usual 
remorseful,  "If  I  had  only  thought  of  that  years  ago,"  "If  we 
had  started  in  soundly  in  the  beginning  we  would  have  ])een 
firmly  entrenched  by  now,"  and  "Because  we  did  not  foresee  the 
advisability  of  ever  sending  a  salesman  now  we  cannot  route  a 


278  KXrolir  Ml'Jh'CJlANDISING 

salesman  m(  iioniial  expense."  Based  scjuarely  upon  the  ex{)eri- 
ences  of  sound  export  managers  who  have  taken  over  the  foreij^n 
departments  of  enteri)rises  whose  sales  a])r()ad  had  been  permitted 
to  grow  indiseriminately,  losses  totalling  in  the  millions  can  l)e 
traced  positively  to  the  lack  of  world-wide  plans  from  the  very 
start. 

Blocked  Development. — One  able  export  executive  charted  the 
19 IG  export  sales  of  his  corporation.  He  worked  from  cor- 
respondence files,  history  records,  agency  contracts  and  actual 
invoices  of  direct  and  indirect  export  sales.  He  found  every 
contract  but  two,  blocked  normal  sales  development,  and  the 
proper  upbuilding  of  a  staff  of  export  travelers.  Minor  terri- 
tories often  were  found  to  be  highly  developed,  while  nearby 
major  markets  were  absolutely  neglected.  One  illustration  is 
sufficient.  This  corporation  sold  $18,000  worth  in  Porto  Alegre, 
Brazil,  in  1915,  and  not  a  dollar's  worth  in  Buenos,  Montevideo, 
Sao  Paulo  or  Bahia. 

The  good  export  manager  is  a  strong  believer  in  the  visualiza- 
tion of  export  sales.  In  the  export  department  of  the  future 
there  will  be  adequate  and  easily  consulted  records  in  the  form 
of  statistics,  geographical  charts  and  graphs  of  sales  by  terri- 
tories political  divisions  and  salesmen,  so  that  the  export 
executive  will  have  brought  constantly  before  him  his  original 
plans,  their  modifications  and  the  results.  Action  based  upon 
complete  visualization  is  far  more  profitable  than  the  far  too 
common  practice  of  merely  grasping  opportunities  as  they  are 
presented.  Proper  equipment  for  visualizing  export  plans,  the 
steps  taken  toward  their  fulfilment  and  the  resultant  sales  are 
part  of  the  ground-work  for  a  world-wide  balanced  export 
development. 

Profit  Justifies  Exporting. — Profit — ^greater  net  profit  over  a 
long  term  of  years — is  the  object  of  exporting.  It  must  be 
conceded  that  the  greatest  fair  net  profit  over  a  long  term  of 
years  will  come  from  the  skilful  carrying  out  of  soundly-ljuilt 
plans.  It  must  be  conceded  that  exporters  who  have  not  yet 
placed  their  development  abroad  on  this  logical  basis  cannot  hope 
to  achieve  the  highest  goals  until  they  adopt  a  common  sense, 
proved  method  which  appeals  to  every  business  sense  and  is 
within  the  means  of  every  pocketbook. 

Whether  the  product  and  the  i)ocke(book  iXM-mit  selling  on 
the  b;isis  of  no  salesm(Mi  or  one  hundred;  whether  the  production 


EXPORT  SALES  ON  A   TEN-YEAR  BASIS  279 

available  for  exporting  is  $10,000  or  $10,000,000  of  merchandise 
the  game  is  exactly  the  same  and  governed  by  the  same  rules. 
Balanced  world-wide  sales  cannot  result  by  chance. 


CHAPTER  XXV 
PLANNING  AN  EXPORT  SALES  CAMPAIGN 

"How   much   can  you  sell?     Where  can  you  sell?     Answer   me 
those  two  questions  before  you  come  to  me  for  selling  methods." 

— Herbert  B.  Johnson. 
"American  manufacturers  are  not  the  best  exporters  in  the  world, 
but  the  best  exporters  in  the  world  are  American  manufacturers." 

— George  C.  Vedder. 

Classification  of  Exporling  Manufacturers.  Well-halanccd  Sales  the 
Ultimate  Goal  of  Export  Selling  Effort.  Selling  Methods  Used  in  Export 
Trade.  Examples  of  Methods  by  Which  Export  Orders  are  Secured.  Types 
of  Export  Sales  Campaigns.  Building  up  the  Sales  Campaign.  Grand 
Tactics  and  Strategics  of  Exporting.  Laying  a  World-wide  Foundation  for 
Export  Sales.  Examples  of  Prestige  and  Good-will  Introductory  Campaigns. 
Methods  Employed  in  an  Intensive  Export  Sales  Campaign.  Capitalizing 
the  Intensive  Export  Sales  Campaign.  Executive  Siipervision  of  Intensive 
Campaigns.     By-products  of  Export  Sales  Campaigns. 

There  are  two  distinct  classes  of  exporters.  The  first  inchides 
all  the  accidental  and  incidental  exporters  whose  foreign  sales 
come  largely  from  unsolicited  orders.  This  class  in  number  still 
predominates.  It  is  this  class,  because  it  has  no  active  interest  in 
overseas  sales,  which  often  reflects  discredit  on  American  methods 
in  foreign  trade.  The  second  class  includes  all  exporters  who 
seek  foreign  trade.  Within  this  second  class  will  be  found  a 
select  group  which  is  without  doubt  the  exponent  of  the  best 
exporting  to  be  found  in  any  country  on  the  globe.  The  United 
States  is  not  a  dominatingly  great  exporting  nation^ — regardless  of 
what  statistics  may  show.  But  there  are  in  the  United  States  a 
few  score  of  exporters  who  excel  the  best  of  their  European 
competitors. 

Average  and  Exceptional  Exporters  Described. — The  one 
outstanding  difference  between  the  exceptionally  good  and  the 
average  exporter  is  a  fundamental  difference.  The  average 
exporter  seeks  foreign  sales  but  seeks  them  in  a  haphazard  way, 
and  his  development  is  largely  a  matter  of  fortuitous  circum- 
stances. He  advertises  his  wares,  replies  to  inquirers,  grants 
agencies  almost  on  request  and  sends  his  own  salesmen  to  easily- 
reached  markets.     Usually  he  is  fairly  efficient  in  the  handling 

280 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  281 

of  orders  from  his  foreign  customers.  But  he  freciueully  has 
excellent  Scales  in  Colombia  and  China,  Timis  and  Sweden,  with 
only  a  sparce  handful  of  customers  in  the  rest  of  the  world. 

The  exceptional  exporter  sells  the  whole  world.  His  sales  are 
nicely  balanced  to  sales  possibilities.  He  starts  his  export 
history  by  a  charting  of  the  world  field,  by  weighing  the  relative 
value  of  the  world's  markets  and  re-weighing  these  values  by  the 
relative  importance  of  his  product  to  the  market.  Too  great 
emphasis  cannot  be  placed  upon  the  wisdpm  of  such  a  course. 
For  foreign  trade  is  not  a  plaything  of  a  day — it  is  the  insurance 
of  American  business  for  centuries  to  come.  The  world  should 
be  charted  not  necessarily  as  a  prelude  to  immediate  sales 
endeavor  in  each  division,  but  at  least  as  a  means  to  ascertain 
the  proper  sequence  of  selling  effort.  The  sales  plan  of  today 
should  provide  for  the  sales  plan  of  tomorrow,  and  certainly 
increase  rather  than  decrease  its  effectiveness.  Only  a  careful 
survey  of  the  world  field  at  the  start  can  prevent  serious  conse- 
quences decades  later. 

Value  of  Divided  Risks. — The  war  drove  home  this  important 
lesson.  American  manufacturers  whose  eyes  had  been  blinded 
to  export  profits  outside  of  Europe  found  themselves  not  only 
subject  to  heavy  losses,  but  also  unknown  in  other  markets  of  the 
world  which  quickly  clamored  for  every  kind  of  manufactured 
product.  Conversely,  exporters  who  had  at  least  taken  the 
simplest  of  world-wide  development  steps  found  their  European 
losses  small  in  comparison  to  their  total  sales,  and  were  quickly 
flooded  with  orders  which  changed  their  losses  to  profits  inside 
a  few  short  months.  Only  half  a  decade  ago  certain  American 
exporters  who  confined  their  sales  to  nearby  Mexico  and  Cuba 
found  revolution  in  one  market  and  a  poor  sugar  crop  in  the  other. 
Their  sales  dropped  to  neghgible  totals.  But  brother  exporters 
with  well-balanced  world  sales  merely  diverted  the  released 
production  to  markets  which  responded  quickly  to  increased 
selling  effort. 

Good  export  structures  are  not  built  like  the  old-fashioned 
farm-house  with  a  small  Iwx-likc  center  and  ells  radiating  here 
and  there,  tacked  on  as  need  demanded.  Good  export  building 
insists  upon  a  basic  plan  permitting  and  anticipating  develop- 
ment along  lines  of  symmetry.  No  sane  domestic  business  is  on 
a  "plan  as  you  go "  basis.  No  export  business  should  be  allowed 
to  adopt  such  a  dangerous  poHcy.     Good  executives  look  with 


282  EXPORT  MERCHANDISING 

st'oru  upon  Ihc  men  wlio  (Mulaiif^cM-  their  cloinestic  future  by  lop- 
sided j';id  erratic  territorial  developiuent.  This  important 
factor  of  export  trade  is  identical  with  the  ideals  and  j^ractices 
of  domestic  trade.  The  experience  of  scores  of  American  and 
European  manufacturers  has  proved  this  beyond  doubt. 

It  is  one  of  the  pleasing  features  of  export  work  that  once  a 
territory  is  well  covered,  an  intensive  sales  campaign  completed 
and  competent  agents  or  dealer  distribution  secured,  sales 
expense  drops  rapidly  while  sales  volume  increases  steadily. 
There  must,  of  course,  be  no  neglect  of  territories  once  developed, 
but  in  many  cases  salesmen's  visits  can  be  at  longer  intervals 
and  less  time  need  l;)e  spent  in  each  country  visited. 

Fundamentals  of  Selling. — Export  sales  campaigns  are  easily 
divided  into  the  four  forms  of  selling:  The  spoken  word — the 
export  salesman;  the  written  word — export  correspondence;  the 
printed  word — export  publicity,  and  the  sample  or  testimonial. 
It  need  hardly  be  said  that  a  combination  of  these  methods 
multiplies  the  power  of  each.  The  keynote  of  the  campaign 
varies  according  to  the  product,  the  territory  and  the  end  to  be 
achieved.  It  is  enough  to  mention  the  growing  frequency  of 
use  of  special  introductory  offers  or  unusual  inducements  on  an 
initial  purchase.  Assortment  offers  which  are  accompanied  by 
premiums  focus  attention  and  facilitate  buying. 

There  must  be  a  clear  conception  both  of  the  end  desired  and 
the  possible  weapons  available  for  use,  before  any  attempt  is 
made  to  indulge  in  direct  selling.  Otherwise,  the  ignorance  of 
the  seller  will  quickly  be  known  to  the  buyer  and  a  lasting  lack  of 
confidence  results — and  confidence  is  the  keystone  of  the  arch 
of  export  trade. 

BUILDING  UP  THE  SALES  CAMPAIGN 

"But   for  pleasure  and  profit  togpthor,  allow  niP  the  hunting  of 
man."' — Rudyard  Kipling. 

The  grand  tactics  of  successful  exporting  are  based  on  the 
desirability  of  ultimately  securing  the  greatest  amount  of  profit 
— net  profit — over  a  long  term  of  years  through  foreign  selling. 
Successful  exporting  aims  at  the  maximum  sales  volume  which 
can  be  secured  at  an  expense  that  can  be  afforded  and  main- 
tained at  a  normal  sales  expense.  The  wise  exporter  strives 
toward  the  goal  of  well-balanced  sales  development  which  by 
distribution  of  risk  insures  against  unfavorable  local  conditions. 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  283 

The  strategics  of  exporting  arc  the  correct  use  of  every  form 
of  sales  attack,  separately  and  in  combination,  properly  timed 
and  directed  intelligently.  They  include  very  definitely  the 
development  or  concentration  of  selling  forces  to  meet 
the  definite  situations  which  arise.  Sound  exporting  multiplies 
the  effectiveness  of  the  tactics  of  modern  scientific  selling  by  sui- 
prise  measures,  by  unusual  attacks,  by  adroit  manoeuvring  and 
by  taking  advantage  of  competitors'  mistakes  or  wrong  tactics. 

It  is  surprising  in  analyzing  the  successes  and  the  failures 
of  the  attempts  by  American  manufacturers  to  see  clearly,  that 
very  few  have  given  any  consideration  to  the  almost  military 
aspects  which  obviously  obtain  in  broad  selling  campaigns.  An 
export  campaign  without  basic  planning  is  mere  mob  selling. 
There  have  been  recorded  export  sales  successes  without  a  full 
conception  of  major  policies  involved,  but  there  has  never  been 
an  export  campaign  that  was  a  failure  when  preceded  by  the 
estabhshment  of  the  explorability  of  the  product  and  the  correct 
use  of  information  gained  by  careful  study. 

LAYING  A  WORLD-WIDE  FOUNDATION  FOR  DEVELOPMENT  OF 

FOREIGN  SALES 

"Three-quarters  of  what  are  generally  termed  'exporters'  are 
really  'Latin  Amerioaners,'  'Europers'  or  'Here  and  therers,'  in  that 
they  neither  sell  nor  plan  definitely  to  sell  except  in  a  modest  fraction 
of  the  world's  land  surface." — Edmands  Woodbridge  Sanger. 

There  is  one  world-wide  foundation  for  development  of  foreign 
sales  that  even  the  firm  with  most  modest  resources  can  lay  and 
lay  well.  That  foundation  is  the  determination  to  profit  by  the 
mistakes  of  others.  Exporters  large  and  small,  novices  and  ex- 
perts, have  repeatedly  handicapped  their  export  future,  due  to 
improperly  and  unwisely  granted  agencies,  establishment  in  some 
markets  of  absurdly  low  prices  or  by  dumping  of  inferior  products 
and  obsolete  models.  The  president  of  a  New  England  corpora- 
tion recently  said,  "We  must  cross  Scandinavia  from  our  maps  of 
export  sales  outlets  for  at  least  two  years,  or  until  our  brands  are 
completely  forgotten.  By  an  unsound  price  policy  which  we 
justified  by  competitive  prices  on  inferior  products  and  by  our 
cheapening  of  our  products  to  meet  low  prices,  we  have  now  a 
deserved  reputation  for  second-rate  goods.  So  we're  going  to 
drop  out  of  Scandinavia  until  it  forgets  us,  and  then,  with  a 
sound  foundation  of  correct  prices  and  our  best  and  latest  prod- 


284  EXPORT  MENCJIANDJSING 

ucls,  start  anew  in  an  important  market  as  beginners,  when  we 
could  have  just  as  W'ell  by  now  been  recognized  as  the  leaders." 
In  the  executive  study  of  the  broader  phases  of  export  selling 
it  is  always  wase  to  investigate  ways  and  means  which  involve 
little  expense  and  which  nevertheless  open  rather  than  close  the 
door  on  later  salesdevelopment.  It  is  often  far  better  to  seek 
and  find  the  one  right  agent  and  wait  for  him  to  become  available, 
than  to  accept  the  second  or  third  best  distributing  outlet  and 
have  the  product  rated  by  the  importance  of  the  agent  in  his  own 
market.  Common  sense  is  an  excellent  guide  on  this  point.  No 
maker  of  a  high-grade,  high-priced  automobile  would  consider 
for  a  moment  the  granting  of  his  agency  to  a  second-rate  garage 
located  on  the  outskirts  of  Boston;  yet  manufacturers  unknow- 
ingly, because  of  a  lack  of  appreciation  of  the  wisdom  of  sane 
foundation-building  abroad,  commit  even  worse  business  crimes. 

PRESTIGE  AND  GOODWILL  INTRODUCTORY  CAMPAIGNS 

"Goodwill  is  as  much  of  an  asset  as  machinery  and  buildings." 

— Herbert  W.  Hess. 

Delayed  sales  effort  will  never  become  popular  w'ith  the  mass 
of  export  sellers.  This  fact  makes  prestige  and  goodwill  build- 
ing campaigns  more  profitable  for  the  few.  Impetuous  and 
impatient  exporters  demand  of  their  sales  department  that  it 
confine  its  efforts  to  the  most  productive  market.  "Do  it  thor- 
oughly or  let  it  alone"  is  a  motto  which,  because  it  conceals  the 
whole  truth,  is  dangerous.  The  motto  does  not  tell  what  to  do. 
The  impetuous  and  impatient  interpret  it  to  mean  to  campaign 
intensively  or  not  at  all.  To  those  who  can  see  only  such  a 
meaning,  it  shoidd  be  pointed  out  that  Joffre — a  firm  believer  in 
the  direct  attack  when  circumstances  permitted — explained  in 
two  words  the  secondary  meaning  when  he  said,  "I  nibble." 

An  effective  prestige  and  goodwill  introductory  campaign 
was  conducted  during  the  War  bj'  a  Western  manufacturer 
whose  output  was  sold  months  in  advance  but  who  was  far- 
sighted  enough  to  see  in  his  futvn-e  the  need  for  export  trade. 
Without  the  right  to  solicit  a  single  foreign  order  for  immediate 
shipment  because  of  the  demands  of  the  government  and  his 
established  domestic  trade,  his  prol)lem  was  difficult.  He  saw 
clearly  that  when  the  War  ended  the  enlarged  capacity  of  his 
own   plant   and   of  his   competitors'   plants  would  mean  keen 


PLANNING    AN  EXPORT  SALE.":;  CAMPAIGN  285 

competition  at  homo.  lie  foresaw  also  that  in  foreign  fields  the 
competition  would  be  international.  He  felt  that  his  business 
future  demanded  that  he  place  himself  in  a  position  to  secure — 
not    to    solicit — foreign    orders    the    moment    the    War   ended. 

Sales  and  Goodwill  Compared. — -His  first  steps  were  exactly 
those  which  would  precede  an  active  selling  campaign.  He 
accumulated  data  on  markets  and  buyers  and  prepared  a  list  of 
prospective  customers  and  agents.  Within  his  sales  force  which 
was  partially  inactive  because  he  was  oversold,  he  selected  three 
men  and  commenced  their  training  as  export  salesmen.  In  a 
broad  way  he  prepared  the  minds  of  his  Board  of  Directors  and 
executive  staff  for  the  later  taking  on  of  export  responsibility. 
Particularly  he  sought  the  counsel  of  experienced  exporters 
and  learned  at  first-hand  of  the  markets  which  would  in  all 
probability  respond  most  rapidly  to  his  sales  appeal  when  he 
was  free  to  sell. 

His  next  step  was  unique  in  the  annals  of  exporting.  Instead 
of  writing  direct  to  the  names  on  his  lists;  instead  of  advertising 
in  media  that  would  reveal  his  identity  and  embarrass  him  with 
orders,  he  started  a  far-reaching  indirect  campaign.  The  first 
step  in  this  indirect  campaign  was  the  mailing  in  plain  folders  of  a 
domestic  magazine  which  contained  an  article  on  his  organiza- 
tion. This  article  was  caused  by  the  then  recent  celebration  of 
the  seventy-fifth  anniversary  of  his  enterprise.  The  page  on 
which  the  article  appeared  was  turned  down,  so  that  the  maga- 
zine opened  naturally  to  show  the  picture  of  his  main  factory. 

All  Important  Details  Listed. — ^His  next  step  was  to  file  his 
complete  business  history  with  banks  and  a  large  forwarding 
company  in  the  territories  he  was  thus  slowly  developing.  By 
affidavits  and  photographs,  references  and  booklets  he  made 
clear  not  only  his  financial  stability,  but  also  his  size,  years  in 
business,  quality  of  products  as  shown  by  testimonials  and  repu- 
tation for  assistance  to  his  customers,  and  incidentally  the 
importance  of  his  governmental  contracts.  This  evidence  was 
transmitted  to  the  foreign  banks  by  his  own  bankers.  The  letter 
which  accompanied  the  evidence  was  written  to  show  clearly  that 
the  Western  manufacturer  was  not  seeking  orders  but  merely 
placing  the  local  banks  in  a  position  to  advise  their  customers 
later  of  the  desirabihty  of  the  American  maker  as  a  source  of 
supply. 

The  Follow-up. — At  irregular  intervals,  in  plain  envelopes  or 


286  EXPORT  MERCHANDISING 

wrappers  or  with  the  imprint  of  trade  or  general  publications, 
clippings  and  marked  copies  (which  gave  evidence  of  some 
worthwhile  characteristics  of  the  manufacturer  or  his  products) 
were  mailed.  Space  in  certain  important  daily  newspapers 
was  taken  and  pure  consumer  publicity  used,  without  more  than 
a  portrayal  of  the  manufacturer's  brand  and  packages. 

Then  came  to  those  on  the  list  letters  from  important  export 
organizations  which  the  manufacturer  had  joined  and  to  which  he 
had  submitted  full  proofs  of  his  ability  to  export  well.  These 
letters  often  merely  called  attention  to  the  wisdom  of  investigat- 
ing sources  of  supply,  and  some  even  did  not  mention  the  maker's 
name,  but  all  laid  the  thought  of  reliability  which  the  manufac- 
turer by  his  proofs  with  bankers  abroad  was  ready  to  supply  in 
convincing  form. 

For  months,  as  the  War  wore  on  this  manufacturer  continued 
his  indirect  campaign.  Calendars,  desk  novelties  and  other 
curiosity-arousers  were  used.  Blotters  for  each  month  came 
regularly  to  importers'  desks,  six  to  the  package.  Still  no  active 
effort  was  taken.  By  the  end  of  the  second  year  the  manu- 
facturer's incoming  foreign  mail  was  large.  But  he  had  prepared 
for  in(iuiries  for  prices  and  agencies.  Each  letter  was  answered 
promptly,  courteously  and  in  the  language  of  the  writer.  In  his 
replies  he  expressed  his  appreciation  of  the  inquiry,  explained 
that  he  was  not  in  a  position  to  make  immediate  deliveries  or 
firm  quotations,  but  unquestionably  would  write  them  fully 
within  a  few  months  when  his  increasing  production  capacity 
would  permit  the  adding  of  a  few  friends  to  his  family  circle. 

Institutional  Selling. — Together  with  his  letters — all  of  which 
were  registered  first-class  mail — he  sent  a  booklet  which,  except 
for  prices  and  details  of  minor  nature,  completely  cataloged 
his  products,  included  views  of  the  factories  and  their  staffs,  told 
of  the  long  history  of  the  company  and  of  its  facilities  for  the 
proper  handling  of  export  shipments. 

Then  the  armistice  was  signed.  Without  loss  of  time  ho 
assumed  the  cancellation  of  government  contracts  and  started 
his  direct  selling  campaign.  His  results  were  satisfactory 
They  justified  the  care  and  expense  of  the  preliminary  campaign. 

In  the  purposely  slow-developing  campaign  of  the  "some 
day  you  will  wish  to  know  us  better,"  it  is  often  possible  to 
bring  in  direct  selling  which  will  reach  the  selected  few  most 
desirable  accounts.     This  "cream  of  the  market"  idea  does  not 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  287 

involve  the  expense  of  an  intensive  campaign  and  is  most  desir- 
able because  it  lays  a  correct  foundation  for  future  sales  efforts. 
It  seeks  out  the  "quality  at  any  price"  buyer  and  satisfies 
him.  It  seeks  out  the  buyers  of  specialties  and  prepares  the 
ground  for  a  general  sowing  and  later  full  harvest.  It  is  not  a 
dangerous  type  of  selling  except  when  it  is  permitted  to  be  an  end 
rather  than  a  means  to  an  end.  For  this  "cream  of  the  market" 
slow  developing  campaign  is  not  reaching  its  ultimate  goal  with 
the  acquisition  of  the  sales  volume  it  reaches  quickly.  It 
requires  hard  and  persistent  effort  when  once  the  major  tactics 
of  exporting  mark  it  for  further  development. 

THE  INTENSIVE  EXPORT  SALES  CAMPAIGN 

"You  must  put  your  whole  body's  spirit  into  doing  a  thing  and 
must  not  make  light  of  even  the  smallest  affair." 

— Baron  Shibusawa. 

Because  an  intensive  sales  campaign  is  an  exhaustive  sales 
campaign  it  should  be  based  on  exhaustive  study  of  the  chosen 
market.  It  is  not  necessary  for  any  but  a  few  peculiar  lines 
to  make  the  study  on  the  field,  even  though  the  finishing  touches 
of  the  campaign  be  made  on  the  field.  The  day  of  the  discoverer 
and  explorer  has  happily  passed  in  relation  to  intensive  campaigns 
as  well  as  to  other  phases  of  export  selling.  Of  particular  value 
are  the  reports  of  the  commercial  attaches,  trade  commissioners 
and  market  investigators  of  the  Bureau  of  Foreign  and  Domestic 
Commerce.  The  market  monographs  which  have  been  prepared 
notably  by  the  National  Association  of  Manufacturers  and  the 
Philadelphia  Commercial  Museum  give  a  wealth  of  detail  which 
can  safely  be  adopted  in  building  up  the  frame-work  of  the 
intensive  campaign. 

Market  Formalities. — In  addition  to  these  sources  of  informa- 
tion, the  peculiarities  of  and  necessary  formalities  in  market 
after  market  have  been  noted  by  careful  students  and  included 
in  books  such  as  the  Export  Encyclopedia,  Filsinger's  "Exporting 
to  Latin  America;"  in  the  numerous  publications  of  the  Depart- 
ment of  Commerce;  in  magazines  such  as  The  World^  Markets, 
Export  Trade,  System  and  Millard's  Review;  in  ti-ade  and  export 
journals  published  in  England  and  the  United  States;  in  reports 
by  our  own  and  foreign  consuls;  in  the  bulletins  of  export  organi- 
zations; in  the  records  of  non-competitive  American  exporters, 
and  the  publications  of  banks  and  forwarding  houses,   credit 


288  J'JXrORT  MKRCIIANDISING 

agencies  and  export  journals.  The  task  is  of  selection  of  material 
rather  than  individual  exploration  of  the  field  in  person. 

Through  a  dozen  sources  lists  can  be  secured  of  prospective 
buyers,  even  in  the  smallest  hamlets.  From  a  dozen  sources 
credit  information — which  is  also  sales  information — can  be 
obtained.  Through  frank  exchange  of  plans  the  novice  as  well 
as  the  expert  can  gain  much,  and  this  fact  is  so  generally  recog- 
nized in  export  circles  that  the  expert  will  gladly  examine  and 
criticize  any  carefully  thought  out  plans  and  offer  suggestions 
based  both  on  the  plan  as  a  plan  and  on  its  effectiveness  in  the 
chosen  market.  It  must  be  remembered  that  the  opportunity 
for  intensive  study  of  individual  markets  is  often  lost  to  the 
expert  by  his  own  faulty  organization  which  makes  him  slave 
instead  of  master  of  his  time.  To  such  men  it  is  well  worth 
the  time  taken  in  criticism  of  a  plan  to  get  a  pre-digested  and  up- 
to-date  survey  of  the  market. 

Samples  in  Campaigns. — One  of  the  most  effective  intensive 
campaigns  is  based  on  sampling,  but  it  has  been  proved  in 
China,  India  and  Greece  only  recently  that  with  scarcely  an 
important  modification  it  can  be  employed  in  lines  which  for 
reason  of  cost  or  product  are  barred  from  the  sampling  field.  In 
such  a  campaign  distribution  must  first  be  secured  to  the  extent 
that  a  representative  stock,  even  though  small,  be  ordered. 
Then,  to  a  selected  list  of  consumers,  compiled  by  the  local 
dealer  or  dealers,  samples  are  distributed  either  by  mail  or  in 
person.  Best  of  all  is  the  plan  that  necessitates  the  actual 
presence  of  the  consumer  in  the  merchant's  store  to  secure  his 
sample. 

Following  the  sample  distribution,  particularly  in  cases  where 
use  is  required  over  a  period  of  weeks  to  satisfy  the  consumer  as 
to  the  merits  of  the  article,  the  American  manufacturer  writes 
under  first-class  postage  to  the  consumer,  explaining  the  advan- 
tages of  his  article  and  mentioning  the  merchant  or  merchants  who 
carry  it  in  stock.  When  the  consumer  has  had  the  opportunity 
to  test  the  article  and  has,  by  mail,  been  acquainted  with  some 
of  its  desirable  characteristics  the  manufacturer's  "missionary 
salesman"  visits  each  consumer,  soliciting  orders  for  the  article  (and 
often  for  other  articles  made  by  the  manufacturer),  explaining 
that  deliveries  and  billing  will  be  by  the  local  merchants  who 
will  carry  for  the  benefit  of  the  consumer  well  balanced  stocks. 

Stocking  the  Dealer. — These  "turn-over  orders"  are  held  by 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  289 

the  "missionary  salesman"  for  the  arrival  of  the  trade  salesman. 
Thus  armed,  the  trade  salesman,  who  now  has  orders  to  prove 
existing  demand,  finds  his  part  in  the  campaign  reduced  not  only 
to  stocking  the  original  retailers  but  to  interesting  the  whole- 
salers by  using  the  retailers'  orders  as  "turn-overs."  Possibly 
as  a  further  step  he  will  appoint  a  manufacturers'  representative 
as  a  resident  agent,  using  the  wholesalers'  orders  to  bring  about 
a  guarantee  of  yearly  sales  from  the  manufacturers'  representative. 

During  an  intensive  campaign,  especially  in  cases  where  the 
use  of  samples  or  direct  letters  to  consumers  have  disadvantages 
or  are  manifestly  unwise,  it  is  possible  to  create  demand  and  to 
enlist  cooperation  through  the  use  of  liberal  indoor  and  outdoor 
publicity;  through  local  newspaper  and  magazine  advertising, 
and  by  demonstrations,  public  and  private.  In  every  intensive 
campaign  possible  use  of  displays;  distribution  of  booklets; 
advertising  blotters;  the  use  of  prize  contests,  and  moving  picture 
house  advertising  should  be  considered  and  employed  if  the 
campaign  permits.  A  principle  of  moment  in  the  intensive 
campaign  is  that  both  the  merchant  and  user  must  constantly 
realize  that  the  product  is  being  intensively  merchandised. 
Even  at  high  initial  expense  the  maker  and  the  article  must  be 
made  to  greet  the  possible  buyer  at  every  turn. 

Trade  Cooperation. — ^The  selling  staff  of  agents,  wholesalers 
and  retailers  inevitably  can  be  made  to  take  a  greater  interest  in 
a  product  launched  by  an  intensive  campaign  than  one  sold  by 
less  spectacular  methods.  Consequently,  one  of  the  chief  duties 
of  both  trade  and  missionary  salesmen  must  be  to  instruct, 
interest  and  enthuse  every  selhng  unit  from  principal  to  sales 
clerk  in  the  product.  The  days  of  the  intensive  campaign  are 
the  days  to  secure  concessions  from  the  merchant.  With  the 
intensive  campaign  in  progress  the  merchant  will  recognize, 
even  from  a  thoroughly  selfish  standpoint,  the  wisdom  of  dis- 
playing in  his  establishment  the  wares  which  are  being  given 
so  much  publicity  outside  his  establishment.  Concessions  in 
regard  to  prominence  in  display  within  a  merchant's  store  can 
be  made  permanent  concessions,  particularly  in  exchange  for 
the  consumer  orders  taken  by  the  missionary  salesman.  The 
merchant  can  often  be  convinced  of  the  profits  he  will  derive  by 
assigning  a  separate  salesman  to  the  product,  or  even  of  bringing 
into  being  of  a  department  for  the  exploitation  of  the  article  and 
a  few  similar  but  not  competitive  articles. 


290  EXI'OHT  MERCHANDISING 

Every  effort  should  be  made  on  the  spot  and  at  the  time 
when  keenest  interest  is  natural,  to  place  the  future  development 
on  a  sound  l)asis  of  cooperative  effort  in  which  the  local  trade 
outlet  will  have  a  reason  for  doing  their  full  share. 

EXECUTIVE  SUPERVISION  OF  INTENSIVE  CAMPAIGNS 

"The  scientific  man  knows  why;  the  practical  man  knows  how; 
the  expert  knows  why  and  how." — Henry  R.  Towne. 

It  is  well  for  the  executive  engaged  in  the  pleasurable  and 
profitable  pursuit  of  foreign  profits  to  remember  that  the  title 
"executive"  means  more  than  the  seldom-used  but  often  correct 
title  "planner."  It  is  the  duty  of  the  executive  to  see  that 
plans  are  carried  out,  that  plans  are  modified,  that  contingencies 
are  provided  for  in  advance  of  need  and  that  the  unexpected  is  to 
be  expected.  The  good  executive  provides  for  cabled  reports  of 
the  progress  of  the  campaign  and  arranges  special  codes  so  that 
points  of  strength  which  the  actual  action  of  the  campaign  may 
develop. 

This  is  not  a  useless  expense  to  satisfy  his  natural  curiosity. 
It  is  a  necessary  expense  that  he  may  be  able  to  direct  the 
campaign.  The  right  amount  to  expend  in  a  campaign  is  the 
amount  which  will  bring  about  its  fruition.  The  good  executive 
has  in  his  original  planning  included  many  forms  of  stimulation 
of  dealer  interest.  If  the  campaign  develops  sudden  strength 
he  may  well  direct  that  some  of  these  plans  be  postponed  or 
abandoned.  If  the  campaign  interest  lags  and  the  issue  is  in 
doubt  he  may  wisely  cable  increased  appropriations  for  publicity, 
extend  the  period  of  the  campaign  or  fight  the  battle  on  a  single 
form  or  phase  of  selling,  focussing  his  selling  rays  on  the  one 
vital  spot. 

From  the  memory  of  the  turning-point  in  past  intensive  cam- 
paigns in  markets  thousands  of  miles  from  the  present  scene  of 
action,  he  has  at  his  command  knowledge  that  he  can  translate 
into  action  to  meet  the  present  emergency.  In  the  nearby  pres- 
ence of  experts  who  have  won  their  spurs  in  the  very  markets 
under  sales  fire  he  can  take  counsel  and  gain  a  new  viewpoint. 
From  his  knowledge  of  other  export  plans  he  can  decide  as  to  the 
amount  which  can  safely  be  added  to  the  original  "maximum" 
set.  The  executive  who  is  content  to  leave  the  once-started 
campaign  in  the  hands  of  the  men  in  the  field  and  who  closes  the 
avenue  of  appeal  to  him,  is  a  poor  general. 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  201 

Analysis  of  Campaigns. — No  intensive  campjiij^n  is  wilhout  its 
value  elsewhere.  The  j^ood  export  man  stu(U(>s  not  (jnl>-  Ix'fore 
but  also  (luring  and  after  eaeii  and  every  campaign.  He  is  not 
content  with  a  statement  of  results  from  his  field  men — he  asks 
for  detailed  reports.  He  does  not  entrust  the  analysis  of  these 
reports  to  clerks,  but  regards  them  as  precious  because  they  guide 
him  in  estimating  the  expense,  comparing  the  exi)ense  with 
results  achieved  and  thus  opening  up  for  his  judgment  the  real 
goal — profits  obtained. 

To  clerks  may  be  left  the  task  of  recording  the  essential 
facts  of  the  campaign.  But  only  the  executive  can  be  entrusted 
with  the  verdict  based  on  the  facts. 

BY-PRODUCTS  OF  EXPORT  SALES  CAMPAIGNS 

"The  good  business  man  demands  the  full  purchasing  value  of  eaeh 
dollar  spent  in  sales  effort." — H.  B.  Maxwell. 

One  of  the  hardest  tasks  of  man  is  to  complete  the  well-begun. 
When  the  success  of  the  export  sales  campaign  is  demonstrated 
by  pleasing  profits  the  temptation  is  always  to  relax.  But 
investment  in  sales  endeavor  should  follow  common  sense 
planning.  The  gleaners  must  follow  the  reapers  if  full  profit  is  to 
be  realized.  It  is  a  growing  and  a  wise  custom  to  have  the 
"missionary  salesman"  remain  in  the  territory  for  several  weeks 
after  the  active  campaign.  This  method  insures  the  completion 
of  half-made  sales,  the  gleaning  of  orders  from  merchants  who 
are  over  slow  buyers  and  the  re-enthusing  of  salesmen  who  have 
lost  their  first  interest  when  the  spectacular  changes  to  the 
regular. 

The  Salesman's  Part. — A  second  and  a  vital  reason  for  the 
planning  for  the  continued  presence  of  the  salesman  is  to  correct 
any  mistakes,  to  rectify  any  failure  fully  to  live  up  to  promises 
and  to  handle  any  criticisms  which  are  the  inevitable  aftermath 
of  any  selling  effort  involving  many  humans  in  many  walks  of 
life.  The  salesman's  presence  is  the  step  which  definitely  links 
the  past  with  the  future.  It  is  natural  that  the  transition  from 
the  introductory  period  to  the  era  of  regular  and  increasing  sales 
at  normal  expense  should  invariably  bring  with  it  problems  which 
are  best  solved  and  remedies  applied  before  the  scratch  becomes 
an  infected  wound. 

If  an  agent  is  a  desirable  means  to  continue  the  selling  cam- 


292  EXPORT  MERCHANDISING 

paign  then  the  salesman,  forearmed  with  credit  as  well  as  sales 
information,  should  make  the  connection  while  on  the  ground, 
lie  has  definite  advantages  to  offer  and  definite  instructions  and 
suggestions  to  give,  all  of  which  are  best  presented  at  first  hand. 
If  the  product  is  one  requiring  considerable  investment;  one  which 
requires  technical  skill  and  the  establishment  of  service  depots, 
an  agent  is  a  real  necessity  unless  substitutes  of  unusual  nature 
are  found  in  one  market  which  are  seldom  available  in  the 
range  of  the  world  field. 

Style  Centers. — Certain  cities,  even  interior  cities,  prove  in  the 
course  of  selling  campaigns  to  be  style  centers  whose  influence 
is  felt  for  hundreds  of  miles  in  the  territory  which  they  either 
serve  direct  or  as  leaders  in  fashion.  One  of  the  most  commonly 
overlooked  by-products  of  export  campaigns  is  the  value  of  the 
influence  of  these  style  centers  and  the  proper  treatment  of  the 
style  center  so  as  to  capitalize  its  sales  and  publicity  value.  It  is 
significant  that  the  leading  exporting  manufacturers  who  make 
investments  rather  than  expenditures  in  the  export  field  seem 
amazingly  liberal  in  cases  where  style  centers  are  found  waiting. 

It  is  important  as  a  by-product  of  export  campaigns  to  deter- 
mine from  data  gathered  from  every  possible  home  and  field 
source  the  consumer  and  trade  saturation  point.  Unless  this 
saturation  point  is  definitely  determined  and  the  point  of  dimin- 
ishing returns  located,  over-great  expectations  and  expense 
based  on  expectations  may  rob  the  profit  column  by  over- 
investment. Fortunately,  it  is  usually  true  that  possible  sales 
volume  is  more  easily  underestimated  than  overestimated. 
This  was  well  proved  within  a  few  months,  when  an  exporter 
with  an  elaborate  organization  and  sixty  years'  experience  in  foreign 
selling  confessed,  "The  War  proved  conclusively  that  our  most 
careful  estimates  of  the  consumption  of  our  products  in  nearby 
Cuba  were  less  than  30  per  cent  of  the  correct  figure.  Our 
evidence  was  correct,  but  upon  re-examination  in  the  light  of  the 
proved  fact  of  our  increased  sales  we  found  that  we  had  invari- 
ably discounted  reports  of  European  competition.  Our  European 
competitors,  as  we  know,  had  on  their  books  almost  a  hundred 
merchants  who  were  unknown  to  us  because  we  never  included 
them  as  outlets  for  our  particular  lines." 

The  Re -order  Test. — American  manufacturers  are  poten- 
tially good  exporters,  because  they  do  not  consider  a  sale  well 
made  until  the  re-order  arrives.     They  are  good  exporters  because 


PLANNING  AN  EXPORT  SALES  CAMPAIGN  293 

they  aid  the  foreign  buyer  to  sell  as  well  as  to  buy.  They  are 
good  exporters  because  they  take  pride  in  as  well  as  profit  from 
their  successes.  They  are  good  exporters  because  they  take 
business  as  their  great  game  in  life,  and,  because  they  regard  it 
as  a  game,  want  it  to  end  in  friendships. 


CIIAPTKU  XXVI 
TYPICAL  EXPORT  SALES  CAMPAIGNS 

"Svicccssful  intprnational  trading  rests  on  bigger  things  than 
mere  exchanges  of  commodities;  these  in  their  fullest  development 
follow  mutual  knowledge  and  understanding." 

— James  Davenport  Whelpley. 

Causes  of  Failure  in  Export  Selling.  Distribution  Must  Go  Hand  in  Hand 
with  Created  Demand.  Consideration  of  the  Campaign  Plan  as  a  Whole. 
Patented  Pencil  Campaign  in  Argentina.  Example  of  Unsuccessful  Cam- 
paign with  Paint  Removers.  Analysis  of  Appeal  of  Product  an  Important 
Factor.  How  Unsound  Competition  Can  Be  Checked.  The  Four  Great 
Elements  in  an  Introductory  Campaign.  A  Typically  Good  Campaign 
Described  in  Detail. 

The  one  great  failing  which  is  ahnost  typical  of  American 
manufacturers  whose  products  demand  re-orders  to  show  a  profit, 
lies  in  the  lack  of  proper  anchorage  in  their  foreign  sales  cam- 
paigns. Too  often  the  introductory  work  is  carried  out  to 
impress  a  reluctant  dealer,  and  in  such  a  manner  as  to  prove  it 
without  thought  of  the  ultimate  channels  of  trade  through  which 
created  demand  must  be  filled. 

Before  starting  to  construct  an  introductory  campaign,  it  will 
prove  profitable  to  examine  the  causes  of  loss  in  several  cam- 
paigns which  seemingly  possessed  merit. 

Unsound  Plans. — One  highly  successful  opening  which  ended 
disastrously,  was  that  of  an  American  boxed  food  product  in 
Chile  in  1913.  A  well-devised  plan  to  excite  consumer  interest 
created  such  immediate  demand  that  the  supply  was  exhausted 
almost  overnight.  This  demand,  coming  as  it  did  through 
many  retailers,  caused  bitter  feelings  at  the  supposed  pref- 
erences given  by  the  wholesaler  who  acted  as  agent.  This  error 
of  inadequate  local  stock  was  comljined  with  a  six  weeks'  delay 
before  further  stock  was  obtainable  and  a  careless  error  in  con- 
nection with  trade-marks.  The  antagonism  aroused  in  the 
agent's  mind  by  a  chance  shipment  through  a  New  York  export 
commission  house  also  led  to  increased  consumer,  dealer  and 
agent  dissatisfaction. 

A  prepared  paint  manufacturer  in  the  Middle  West,  whose 

294 


TYPICAL  EXPORT  SALES  CAMPAIGNS  295 

export  manager  was  limited  by  the  smallest  of  appropriations, 
brought  his  line  into  demand  of  a  large  and  influential  class 
of  users  in  Peru  by  an  ingenious  and  well  carried  out  "all-by- 
mail"  campaign.  His  efforts  to  secure  distribution  in  advance, 
however,  were  not  ecpially  well  planned,  and  failed  utterly. 
The  user  found  himself  unable  to  buy.  He  did  not  receive  the 
promised  full-sized  free  samples,  as  these  were  to  be  shipped  with 
the  non-forthcoming  dealer  orders.  Some  few  were  so  impressed 
with  the  descriptions  of  the  product  that  even  this  discourage- 
ment did  not  end  matters.  But  even  these  found  that  the 
freight  or  express  charges  were  prohibitive  on  the  quantities 
they  would  buy  for  their  own  use.  The  final  result  was  an  up- 
hill fight  a  year  later  with  only  the  memory  of  the  quality  of  the 
small  mail  samples  as  an  asset,  and  disgusted  users  and  dealers 
as  a  monumental  debit. 

Costly  Errors  in  Campaigns. — There  is  decided  necessity  for 
consideration  of  the  campaign  plan  as  a  whole.  A  New  York 
maker  of  hammocks  combined  a  creditable  product,  excellent 
retail  export  catalogs,  sales  letters  that  left  little  to  be  desired 
and  a  prompt  and  sincere  demand.  These  assets  were  all  lost 
by  the  failure  to  figure  correctly  the  laid-down  cost  to  the 
dealer.  As  a  result,  the  user  was  quoted  prices  by  the  American 
manufacturer  which  represented  a  loss  to  any  dealer. 

It  is  worth  while  to  examine  the  details  of  other  successful 
and  unsuccessful  introductory  campaigns,  noticing  the  manner 
in  which  these  combine  or  fail  to  combine  every  possible  effort 
on  the  part  of  the  manufacturers  and  dealers. 

A  SUCCESSFUL  CAMPAIGN 

Product:  Patented  lead  pencils. 

City:  Buenos  Aires,  Argentine  Republic. 

Agency  Arrangement:  Firm  representing  various  English 
and  American  stationery  lines,  selling  only  wholesalers. 

The  manufacturer  had  first  investigated  the  territory  through 
the  export  organization  to  which  he  belonged  and  through  the 
export  papers  in  which  he  advertised,  and  had  selected  the  firm 
seemingly  in  the  best  position  to  introduce  its  products. 

To  it  the  manufacturer  offered  its  best  discounts  and  offered 
shipments  with  ninety  days  S/D  against  B/L,  D/A.  It  guaran- 
teed a  commission  of  10  per  cent  on  any  direct  sales  in  Buenos 


29G  EXPORT  MERCHANDISING 

and  protected  them  by  10  per  cent  on  prices  against  any  firms 
sold  direct. 

Commissions  and  Protection. — Commission  house  sales  were 
also  subject  to  his  10  per  cent  commission  and  the  agents  were 
protected  by  10  per  cent  on  these.  An  agreement  was]_signed 
which  involved  these  features: 

1.  Sole  agency  for  Buenos 

2.  50-10-10  per  cent  discount  from  list  prices 

3.  Shipments  with  90-day  S/D  attached  B/L,  D/A 

4.  Introductory  campaign  at  manufacturer's  expense. 
The  agents  agreed : 

1.  Not  to  handle  any  direct  competitor's  lines 

2.  To  cooperate  in  introductory  work 

3.  To  sell  to  reliable  firms  a  minimum  of  $1,500  in  the  first  year  of  the 
five-year  agreement,  and  an  increase  of  50  per  cent  each  succeeding  year. 

The  introductory  plan,  which  was  the  sales  argument  which 
made  the  contract  acceptable  to  the  agents,  was  based  on  creat- 
ing a  demand  by  "educating"  both  consumer  and  trade. 

Sound  Consumer  Sampling. — The  manufacturer  prepared 
four  styles  of  samples: 

1.  A  single  medium  hard  pencil  in  an  individual  box,  with  a  circular  in 
Spanish  describing  its  self-sharpening  and  eraser-protecting  device,  and 
giving  the  agent  as  a  source  of  future  supply. 

These  samples  were  sent  out  by  the  agent  to  a  selected  list 
of  1,000  smaller  offices,  directed  to  the  buyer  of  office  supplies 
and  accompanied  by  a  letter  on  a  special  letterhead  bearing 
the  names  of  both  the  manufacturer  and  the  agent. 

2.  A  set  of  the  four  best  selling  pencils  to  a  list  of  500  larger  offices.  A 
similar  letter,  but  including  a  coupon  good  for  3^-dozen  of  any  style,  and  a 
retail  price  list  circular  were  used  as  enclosures. 

3.  Display  sample  sets  of  twenty-five  styles  were  distributed  to  two- 
hundred  and  fifty  retailers  by  an  employee  of  the  agent,  and  to  each  retailer 
a  special  assortment  at  a  net  price  equal  to  $15  was  offered  showing  a  100 
per  cent  profit,  and  an  assortment  of  blotters  and  circulars  imprinted  with 
the  dealer's  name  was  used  as  an  added  inducement,  while  the  consumer 
sampling  campaign  and  the  merits  of  the  pencils  themselves  were  dwelt  on. 

4.  Wholesale  price  lists  and  sample  books  combined  were  distributed  to 
the  wholesalers  who  were  given  a  30  per  cent  margin.  These  were  bound  in 
imitation  leather  and  folded  to  pocket  size,  showing  the  twenty-five  styles 
already  known  to  retaQers,  and  were  intended  for  use  by  the  wholesalers' 
salesmen. 

Standardization  of  Price. — -The  agents  who  were  the  leading 
stationery  representatives  were  able  to  get  an  agreement  both 


TYPICAL  EXPORT  SALES  CAMPAIGNS  297 

as  to  retail  and  jobbing  prices  before  the  goods  were  really  on  the 
market,  preventing  price-cutting  and  insuring  an  attractive 
profit  to  all  concerned. 

The  manufacturer  with  his  knowledge  of  consumers'  preferences 
in  other  Latin  American  markets  and  information  furnished  the 
agents,  was  able  to  guide  intelligently  the  initial  purchase  of  the 
agents  so  as  to  meet  demands  for  all  styles  and  yet  not  overstock. 

The  samples  were  included  with  the  agent's  first  order,  so  that 
from  the  mailing  of  the  consumer  samples  to  the  familiarizing 
to  the  wholesale-retail  trade,  less  than  a  week  elapsed. 

Turn-over  Orders. — ^The  next  step  was  a  personal  visit  to  the 
larger  consumers  soliciting  orders  through  their  retailer,  and 
signed  orders  were  politely  suggested.  With  these  orders  to 
handle  the  retailer  was  willing  to  place  an  order  of  double  the 
amount  and  give  his  wholesaler's  name.  The  wholesaler,  in 
turn,  was  glad  to  accept  these  orders  again  doubling  the  quan- 
tity, as  he  was  at  no  sales  expense  and,  like  the  retailer,  felt  it 
wise  to  order  in  sufficient  quantity  to  be  able  to  fill  re-orders 
from  stock. 

In  the  meantime,  many  of  the  smaller  users  inquired  in  regard 
to  prices  and  sources  of  supply.  The  orders  which  resulted 
from  these  inquiries  were  placed  through  retailers.  This  further 
increased  the  size  of  the  retailers'  orders,  and  forced  the  whole- 
saler to  increase  his  purchases.  The  manufacturer,  who  received 
copies  of  all  orders,  wrote  each  purchaser  a  personal  letter  of 
thanks  and  offered  expert  advice  in  regard  to  the  best  pencils  for 
particular  purposes. 

Utilizing  Dealers'  Windows. — A  window  display  campaign 
was  started.  Three  styles,  varying  from  an  assortment  of 
lithographed  signs  to  large  moving  displays  which  were  loaned 
for  two-week  periods,  helped  in  connecting  the  smaller  firms 
sampled  with  the  dealers  handling  the  line. 

The  manufacturer  was  sent  a  list  of  all  firms,  both  users 
and  trade,  who  had  been  sampled.  Three  attractive  three-color 
bulletins  in  Spanish  were  mailed  at  two-month  intervals  to  the 
users,  retailers  and  wholesalers,  who  for  various  reasons  pre- 
ferred not  to  buy  from  the  agents,  were  sold  f.o.b.  New  York 
at  prices  figured  to  be  about  2  per  cent  higher  than  the  agent's 
price  to  wholesalers  delivered  Buenos,  and  the  agent  promptly 
credited.  Retailers'  orders  through  commission  houses  were 
filled  at  a  schedule  10  per  cent  less. 


298  EXPORT  MERCIIAXDISING 

Important  Details  Covered.  No  ncwspuixT,  outdoor  or  street 
car  atlvortisiu^  was  iiscil.  The  diicct  attack  with  the  goods 
theinsolvcs  on  tlie  user  was  felt  to  be  so  effective  that  other 
means  would  be  largely  wasted.  The  brand  name  and  patents 
were  protected  in  the  manufacturer's  name  before  the  first 
samples  were  distributed.  Each  succeeding  year  the  lists  were 
carefully  revised  and  new  efforts  made  to  interest  both  the  smaller 
trade  and  the  large  and  small  user. 

The  first  six  months'  sales  more  than  paid  for  all  introductory 
work.  At  the  end  of  three  years  the  pencils  were  the  best  selling 
high-grade  pencils  in  Buenos,  and  sub-agencies  were  placed  in 
Rosario,  La  Plata,  Bahia  Blanca  and  Cordoba. 

It  is  of  interest  to  note  that  the  first  year's  sales  exceeded  the 
amount  called  for  in  the  third  year  of  the  contract,  and  that  the 
second  year's  exceeded  the  minimum  set  for  the  fifth  year. 


AN  UNSUCCESSFUL  CAMPAIGN 

Product :  Line  of  Stain  Removers. 

City:  Melbourne,  Australia. 

Agency  Arrangement :  Largest  wholesaler  and  retailer. 

Here  the  agency  was  solicited  by  the  wholesale  and  retail 
drug  supply  house  as  a  result  of  a  limited  demand  due  to  advertis- 
ing in  certain  export  magazines. 

With  the  granting  of  the  agency,  liberal  samples  were  included 
with  the  first  order.  Advertising  matter  of  many  kinds,  attrac- 
tively printed,  was  sent,  and  the  agent  informed  of  successful 
methods  of  distribution  employed  by  many  other  foreign 
customers. 

At  monthl}^  intervals  the  manufacturer  wrote  the  agents  with 
inquiries  in  regard  to  their  success  in  introducing  the  removers. 

The  Advertising  Angle. — Six  months  after  the  arrival  of  the 
shipment  the  agents  wrote  that  the  stain  removers  were  not 
selling  rapidly  and  asked  for  a  $500  advertising  appropriation 
for  newspaper  publicity.  The  manufacturer  compromised  at 
$250,  with  an  additional  $250  if  results  proved  satisfactory. 

The  advertisements  were  well  worded  and  printed  from 
special  electrotypes  provided  by  the  manufacturer,  but  as  the 
goods  were  not  well  distributed  inquirers  were  seldom  able  to 
buy  them  and  no  real  results  could  ])e  traced. 


£■_  i^ 


Fig.  2U. — Visiting  the  Chinese  trade.     The  Shanghai  Manager  of  United  States 
Rubber  Export  Company,  Ltd.  calling  upon  dealers  in  Hankow. 


Fig.   21. — Good.\ear  tires  in   Korea.      The  uncient    philosoiihy  of  the  Orient 
faces  a  problem  of  today. 


TYPICAL  EXPORT  SALES  CAMPAIGNS  299 

Early  Cancellation  Questionable. — A  year  later,  when  no 
substantial  gains  had  been  made  the  manufacturer  gave  notice 
of  cancellation  of  the  agreement  which  was  allowable  under  its 
terms,  and  solicited  orders  direct  from  dealers.  This  resulted 
in  very  unsatisfactory  returns  and  ended  all  serious  efforts  to  gain 
the  market  of  Melbourne. 

Secrets  of  Success. — In  the  case  of  the  patented  pencil  severe 
competition  existed  because  for  decades  pencils  of  high  and  low 
grade  had  been  urged  on  dealers,  and  salesmen  direct  from  the 
German,  French  and  English  factories  had  visited  the  trade. 
The  thoroughness  of  the  campaign  and  the  provision  for  creating 
a  demand  and  handling  the  demand  insured  success  from  the 
start.  By  protecting  both  the  retailers'  and  jobbers'  profit 
and  by  preventing  harmful  imitations  by  the  patents  and  the 
trademarks  a  sure  future  was  ensured. 

By  eliminating  all  possible  waste  a  larger  amount  of  introduc- 
tory work  was  made  possible.  The  one  vital  element,  however, 
was  the  cooperation  of  the  agent  and  the  manufacturer. 

The  selection  of  users  to  be  sampled,  the  retailers  and  jobbers 
to  be  solicited  and  the  careful  following  up  of  the  work  was  an 
absolutely  essential  part  of  the  campaign.  The  attractive 
sample  sets,  window  display,  advertising  matter  and  direct 
letters,  together  with  the  selling  plan,  were  no  less  essential. 

Causes  of  Failure. — In  the  case  of  the  stain  removers  no  real 
competition  existed.  To  be  sure,  the  retail  druggist  would 
recommend  various  chemicals  to  remove  certain  stains,  but  the 
ready-to-use  stain  eradicator  was  needed  but  not  on  sale. 

The  first  handicap  to  the  plan  was  the  antagonism  of  the 
other  Melbourne  wholesalers  on  account  of  the  agent's  retail 
department,  the  second,  the  lack  of  talking  points  about  the 
introductory  consumer  campaign;  for,  frankly,  all  that  could 
be  urged  on  this  line  was  that  liberal  samples  and  advertising 
matter  would  be  given  free. 

Compare  this  as  a  sales  argument  with  that  of  a  handful  of 
signed  consumer  orders. 

There  could  be  no  strong  talks  on  maintained  prices,  proved 
demand  and  increasing  sales,  as  these  were  not  clearly  enough 
defined  in  the  manufacturer's  mind. 

It  will  be  seen  that  the  theory  of  introductory  work  as  outlined 
elsewhere  in  this  chapter  is  exemplified  in  the  pencil  campaign, 
while  a  failure  to  recognize  that  there  is  any  necessity  for  knowl- 


300  EXPORT  MERCHANDISING 

edge  of  general  principles  is  responsible  for  the  well-meant  but 
unwise  methods  shown  in  the  stain  remover  campaign. 

Adaptation  of  Domestic  Campaigns. — Careful  students  of 
business  conditions  and  methods  in  foreign  markets  unite  in  their 
opinion  that  sales  ideas  which  have  made  campaigns  successful 
in  the  United  States,  almost  invariably  prove  successful  overseas. 
The  slight  modifications  sometimes  needed  are  usually  clearly 
indicated  in  advance.  The  fundamental  basis  for  an  export 
introductory  campaign  is  suitability  of  the  product  for  its  market. 
Refrigerators  must  follow  ice-making  plants  in  many  Latin 
American  markets.  Experience  proves  that  the  first  price  of 
the  product  to  dealer  or  to  user,  whether  above  or  below  its 
competition,  has  no  great  effect  on  its  chances.  Abroad  as  at 
home,  a  good  salesman  will  sell  with  either  quality  or  price  in 
his  favor,  while  a  poor  salesman  with  both  in  his  quiver,  will 
starve  to  death  for  lack  of  weapons  he  can  use.  Against  competi- 
tion, the  sales  appeal  of  which  ends  with  a  formal  quotation  and 
sending  of  price  list,  the  intelligent  presentation  and  explanation 
of  points  of  merit,  plus  actual  sales  assistance,  often  can  eliminate 
the  price  factor  at  the  outset. 

Importance  of  Correct  Appeal. — This  makes  it  clear  that  the 
appeal  of  a  product  should  be  carefully  analyzed.  The  proper 
arguments  must  be  in  approaching  agent,  dealer,  and  consumer, 
for  these  may  be  of  entirely  differing  natures.  At  the  very 
start  of  any  correct  analysis  it  will  be  found  that  a  consumer 
considers  it  a  strong  argument  if  he  is  offered  a  larger  quantity  of 
any  product  for  the  price  he  would  customarily  pay  for  a  smaller 
quantity.  When  we  seek  to  find  the  dealer  appeal  in  this,  we 
find  it  lacking.  For  any  dealer  would  prefer  to  sell  a  smaller 
quantity  for  the  same  price. 

An  excellent  illustration  of  this  point  came  in  a  talcum  powder 
for  which  persistent  newspaper  publicity  built  up  a  consumer 
demand  in  Central  America.  The  equivalent  in  Spanish  for 
"Ask  for  the  larger  can,"  at  the  outset  impressed  dealers  to  the 
point  of  placing  trial  orders.  An  alert  American  competitor, 
instead  of  yielding  to  the  temptation  to  lower  his  profit  margin 
and  compete  on  the  quantity  per  price  unit  basis,  capitalized 
the  error  by  direct  appeal  to  the  dealers'  profit  column.  The 
standard  maker  simply  pointed  out  these  two  reasons  for  giving 
his  product  preference: 


TYPICAL  EXPORT  SALES  CAMPAIGNS  301 

1.  That  the  larger  can  nearly  doubled  shipping  weights  and  measurements, 
increasing  freights  and  duties  and,  as  a  consequence,  delivered  cost. 

2.  That  by  giving  twice  the  quantity  of  talcum  powder,  the  consumer 
was  removed  from  the  market  for  twice  as  long  wath  no  compensating  profit. 
We  can  note  to  our  advantage  that  the  standard  maker  did  not 
cloud  the  issue  by  any  reference  to  quality  or  demand. 

The  Double  Sales  Argument. — This  axiom,  that  a  good  sales 
argument  is  without  value  unless  directed  at  the  right  party, 
will  prevent  lost  sales  if  embodied  in  practice.  A  double  appeal 
to  dealer  and  user  is  naturally  the  ideal  solution,  which  in  the  case 
cited  might  well  lie  in  an  attractive  and  convenient  container 
holding  as  little  as  that  of  any  competitor.  To  the  consumer, 
the  arguments  of  saving  of  time  and  temper  and  protection  of 
the  powder  would  appeal,  while  the  dealer  would  not  fail  to  be 
impressed  with  greater  initial  profits  and  more  frequent  re-orders, 
to  which  the  alert  maker  would  add  service  and  sales  helps. 

ELEMENTS  OF  INTRODUCTORY  CAMPAIGNS 

The  export  introductory  campaign  must  embody  four  distinct 
elements : 

1.  Suitability  of  product 

2.  Correct  division  of  appeal 

3.  Education  of  user 

4.  Trade  distribution. 

"Creation  of  demand"  is  not  an  adequate  substitute  for 
"Education  of  user,"  but  merely  one  of  the  elements.  It  is 
re-order  business  that  American  manufacturers  seek.  Re-order 
business  often  must  be  based  on  education  of  the  user  to  his 
need  and  to  the  qualities  of  one  product  as  against  all  others. 

Value  of  Correct  Division  of  Appeal. — It  is  a  common  over- 
sight of  superficial  students  of  export  trade  to  omit  "Correct 
division  of  appeal."  The  little  excursion  into  the  reasons  for 
campaign  failures  has  shown  it  to  be  of  as  great  importance  as  the 
quality  of  the  product,  and  of  even  greater  value.  Investigation 
has  taught  us  to  get  under  the  surface  of  the  problems.  By 
departing  from  the  rule  of  considering  export  merchandising 
problems  just  as  in  domestic  sales  problems,  manj^  beginners 
court  disaster.  It  is  a  faulty  conclusion  that  a  crossing  of  boun- 
daries furnishes  an  antidote  for  unsound  practice. 


302  EXPORT  MERC  HANOI  SI  NO 

A  MODEL  EXPORT  SALES  CAMPAIGN 

An  imaginary  export  sales  campaign  typical  of  better  American 
exporting  is  given  here  for  the  instruction  of  the  novice  and 
the  comparison  of  the  veteran. 

Place:  Imaginary  Latin-American  republic  of  Argperec,  a 
country  divided  into  two  geographical  and  political  units  of 
which  the  markets  are  La  Rio  and  Santival. 

Time:  The  present. 

Line:  Toilet  preparations. 

Territorial  Divisions. — Preliminai-y  investigations  through 
export  organizations  made  it  clear  that  no  one  firm  covered  both 
sections  of  Argperec,  and  that  each  division  needed  separate 
consideration.  On  account  of  its  greater  importance,  first 
attention  was  turned  to  La  Rio.  But  it  was  found  that  the  ideal 
of  selling  all  wholesale  houses  was  impossible,  as  already  a 
number  represented  competitors. 

To  offset  this,  however,  it  proved  that  one  purely  wholesale 
house  which  had  previously  specialized  on  toilet  preparations, 
representing  a  world-known  French  line,  had  come  to  the  end 
of  a  five-year  contract  and,  in  view  of  the  European  situation, 
was  forced  to  consider  a  change. 

Before  realizing  upon  this  information,  a  careful  study  was 
made  of  discounts  and  policy,  so  that  the  manufacturer  might 
protect  from  the  start  all  concerned  in  the  re-sale  of  his  products. 

Trade  Discounts. — On  this  basis  he  made  the  agent's  discount 
70  per  cent. 

Discount  to  the  wholesalers  they  might  interest,  60  per 
cent; 

Large  retailers,  50  per  cent,  and  small  retailers,  40-10  per  cent. 

To  protect  prospective  agents  against  competition  of  export 
houses,  a  sliding  scale  of  discounts  was  evolved,  based  on  the 
nature  and  importance  of  their  customers.  In  addition  to  the 
2  per  cent  cash  discount  to  the  export  houses,  special  induce- 
ments were  offered,  forfeitable  in  case  agents  failed  to  live  up 
to  the  sliding  scale  plan.  As  a  final  argument  for  cooperation, 
only  the  40-10  per  cent  discount  was  offered  to  export  houses  who 
were  unwilling  to  cooperate  with  the  manufacturer. 

Long  Credits  Avoided. — French  competitors  had  offered  their 
agents,  as  a  regular  practice,  terms  of  sixty  days  from  date  of 
invoice,  payment  at  six  months'  time,  charging  6  per  cent  interest 
for  the  four  months'  interval.     But  the  American  manufacturer 


TYPICAL  EXI'ORTS  SALES  CAMPAIGNS  303 

knew  from  experience  that  his  Hnes  could  he  .sold  on  a  sixty-day 
documentary  sight  draft  acceptance  basis  and  show  the  agent 
both  a  rapid  turn-over  and  a  pleasing  profit  margin.  He, 
therefore,  stuck  by  his  guns. 

With  the  market  known,  and  discounts  and  terms  settled,  the 
American  manufacturer  was  in  a  position  to  take  the  aggressive 
with  his  prospective  agent.  He  wrote  offering  the  70  per  cent 
discount  f.o.b.  steamer  New  York,  shipments  to  be  made  with 
sixty  days'  sight  draft  attached  to  bills  of  lading,  documents 
against  acceptance.  To  the  better  was  attached  an  estimate 
showing  the  approximate  laid-down  cost  in  La  Rio  of  all  leading 
lines.  Here,  again,  export  organizations  proved  their  worth  by 
furnishing  details  of  duties,  freights  and  insurance. 

Protecting  the  Agent. — An  explanation  of  the  series  of  dis- 
counts was  made,  pointing  out  the  protection  given  against 
outside  competition.  While  retaining  the  right  to  sell  direct 
when  unsolicited  orders  were  received,  the  manufacturer  showed 
himself  willing  never  to  extend  better  than  a  discount  of  60 
per  cent  on  direct  sales  on  which  the  agents  would  receive  a 
commission. 

To  capitalize  the  strong  sales  value  of  tangible  evidence, 
there  was  sent  (prepaid  in  every  way)  a  shipment  of  samples 
of  the  most  attractive  lines,  each  item  fully  identified.  Every 
comparison  with  their  competition  was  urged.  Advertising 
literature  in  Spanish,  of  course,  was  not  slighted.  Methods  of 
distribution  which  other  Latin-American  dealers  had  found 
advantageous  were  pointed  out  merely  as  suggestions. 

The  real  kernel  of  the  long  letter  was  the  introductory  plan. 
This  was  explained  in  detail.  Frank  criticism  and  suggestions 
were  requested.  Underneath  the  courteous  phrases,  the  advan- 
tages of  handling  these  products  were  pressed  home,  all  but 
taking  their  acceptance  of  the  agency  for  granted. 

INTRODUCTORY  CAMPAIGN  METHODS 

This  introductory  plan  had  two  divisions.  One  included 
arguments  to  use  with  the  retail  trade.  The  other  insured  fiom 
the  start  a  consumer  demand  so  that  the  trade  could  not  become 
weary  waiting  for  goods  while  dealers'  purchases  were  on  the  way. 

For  the  retailer,  an  assortment  was  made  up  containing 
only  a  few  novelties,  in  addition  to  the  staples  which  the  nianu- 


304  EXPORT  MERCHANDISING 

factiirer  planned  to  feature  with  consumers.  As  a  premium, 
a  lithographed  metal  cabinet,  serving  the  triple  })urpose  of 
advertisement,  storage  and  automatic  sales  assistance,  gave  the 
offer  immediate  sales  appeal. 

In  order  that  the  retailer  would  aid  in  the  endeavor  to  interest 
users,  the  American  manufacturer  prepared  a  handsomely 
embossed  label  which,  at  little  expense,  was  printed  with  the 
retailer's  name  as  donor  of  the  sample  it  identified.  With  dealer 
literature  for  free  distribution  and  the  agent's  promise  of  a 
city-wide  sampling,  the  retailer  answered  for  himself  the  usual 
arguments  against  stocking  a  new  line. 

Securing  Cooperation  of  Retailers. — A  further  step  toward  the 
essential  securing  of  the  co-partnership  of  the  retailer  came  in  the 
method  of  sampling.  It  was  explained  that  each  purchaser  of 
the  retail  assortment  was  entitled  to  have  fifty  women  sent 
samples.  As  an  individual  touch,  these  women  were  written 
directly  from  the  factory  and  the  retailer's  name  mentioned  as  a 
source  of  further  supply. 

The  really  important  part  of  this  lay  in  the  fact  that  the  dealer, 
in  order  to  live  up  to  his  part  and  supply  the  fifty  names,  was 
forced  to  overcome  his  natural  inertia  and  to  become  a  partner 
in  fact  as  well  as  theory.  This  ensured  a  personal  relation  from 
the  outset.  The  dealer's  natural  curiosity  and  interest  in  the 
success  of  the  plan  proved  more  valuable  to  the  manufacturer 
than  even  the  profit  on  the  initial  orders. 

Coaching  the  Agent. — The  manufacturer,  of  course,  was 
careful  to  make  clear  to  the  agent  (for  he  had  convinced  himself 
by  this  time  of  his  certain  acceptance)  the  best  wholesale,  retail 
and  consumer  appeals  of  the  lines  as  a  whole.  The  exceptional 
merits  of  the  one  or  two  leaders  as  examples  were  given  in  detail. 

After  another  exchange  of  letters  the  agent  was  secured  on  a 
contract  covering  five  years,  subject  to  the  usual  cancellation 
clauses.  The  agent  then  placed  an  initial  order  of  the  size  indi- 
cated as  binding  the  manufacturer  to  the  introductory  work 
planned. 

With  his  initial  order  the  agent  included  lists  of  wholesalers 
and  retailers  to  whom  the  manufacturer  wrote  using  the  appeal 
which  applied,  and  emphasized  the  introductory  assortment. 

Coordination  of  Effort. — Before  the  agent's  first  order  left  the 
American  exporter's  factory  the  agent's  activities  resulted  in 
reports  of  sales  and  lists  of  consumers.     From  the  receipt  of  the 


TYPICAL  EXPORT  SALES  CAMPAIGNS  305 

first  of  these  reports  until  every  possible  consumer's  patronage 
was  secured  the  manufacturer  labored  incessantly  in  living  up  to 
his  promises.  Not  only  were  samples  and  letters  sent,  but  also 
at  monthly  intervals  the  manufacturer  refreshed  users'  memories 
by  well-illustrated  private  post  cards  showing  some  product  in 
its  natural  colors. 

When  the  staple  lines  were  well  introduced,  profit  bringing 
specialties  were  featured  without  sampling.  For  a  full  year  from 
the  first  letter  to  the  agent  all  efforts  were  centered  on  selling  the 
widest  possible  variety  of  products.  Naturally,  the  possibilities 
of  any  items  which  failed  to  make  a  strong  impression  at  the 
outset  were  not  overlooked.  By  persistent  effort  these  were 
brought  to  a  suitable  prominence. 

Once  the  products  were  well  launched,  the  agent  was  left  to 
continue  the  work.  For  with  the  American  manufacturer's 
regular  advertising  matter  and  samples,  plus  his  selling  ability, 
the  question  of  steadily  increasing  sales  volume  was  certain. 


THE  SANTIVAL  CAMPAIGN 

In  the  meantime,  an  entirely  different  problem  was  faced  in 
Santival,  the  important  market  of  Southern  Argperec.  Here, 
from  the  number  of  wholesalers  in  a  position  to  handle  the  lines, 
all  of  whom  had  an  established  clientele,  it  seemed  most  unwise 
to  antagonize  the  majority  by  appointing  any  one  firm  as  an 
agent. 

Investigation  located  an  enterprising  firm  of  manufacturers' 
agents  who  already  sold  several  drug  lines  and  who  showed  a 
strong  desire  to  prove  their  ability  to  act  as  resident  representa- 
tives. To  this  firm,  once  satisfied  that  they  enjoyed  popularity 
in  the  drug  trade,  and  a  reputation  for  honesty  and  energy,  an 
exclusive  agency  was  granted.  These  agents  had  no  facilities 
for  carrying  stock.  They  represented  the  American  manufac- 
turer on  a  yearly  basis,  just  as  a  salesman  would  on  a  trip. 

Compensation  of  Agent.-^Their  compensation  was  based  on 
commissions.  The  difference  between  the  discount  they 
extended  and  70  per  cent  represented  their  "salary."  Naturally, 
this  furnished  a  distinct  incentive  to  get  the  right  price.  In  no 
case  were  the  agents  allowed  to  sell  at  a  better  discount  than  GO 
per   cent  to  wholesalers,   or  50  per   cent  to  retailers.     On  all 

20 


3()t)  EXPORT  MERCHANDISING 

indirect  sales  they  were  recognized  exactly  as  on  their  own  direct 
sales. 

The  agents  retained  the  option  of  direct  shipment  and  billing 
to  their  customers  by  the  manufacturer.  When  the  agents  felt 
that  their  knowledge  of  intimate  conditions  would  allow  them 
to  extend  credit  where  the  manufacturer  would  hesitate,  the 
agents  assumed  the  credit  risk  by  instructing  the  manufacturer 
to  bill  these  shipments  to  them. 

The  sales  policy  and  introductory  campaign  was  identical, 
in  the  main,  with  the  procedure  in  La  Rio,  although  it  proved 
to  advantage  to  have  the  agents  unbiased  in  assuming  supervision 
of  all  sampling  plans  and  acting  as  the  manufacturer  would  have 
his  own  salesman  act  in  similar  circumstances. 

Analysis  of  Campaign  Fundamentals. — To  check  practice  as 
against  theory,  it  will  be  noted  that : 

1.  Suitability  of  product  was  determined 

2.  Appeal  was  properly  divided  into 

(a)  Agency  arguments 

(b)  Wholesaler's  arguments 

(c)  Retailer's  arguments 
(c)  Consumer  arguments. 

3.  Education  of  consumer  was  accomplished  by  samples  and  booklets. 

4.  Distribution  was  made  a  fact  throughout  the  chain  of  users  and  sellers 
and  its  future  insured  by  proper  division  of  profit,  and  creation  of  demand. 

Campaign  Costs. — With  a  complete  year  as  a  base,  the  cost  was 
determined  of  laying  the  foundation  in  Argperec  for  an  export 
future.     The  expense  items  fell  into  three  groups: 

1.  Cost  of  securing  agent 

2.  Cost  of  securing  trade  orders 

3.  Cost  of  creating  consumer  demand. 

The  principal  items  of  all  three  were  postage,  samples  and  credit 
reports.  They  did  not  exceed  10  per  cent  of  the  volume  of  busi- 
ness called  for  in  the  agency  contracts,  for  no  newspaper  or  other 
publicity  was  employed  at  the  manufacturer's  expense,  or  adver- 
tising allowance  made  to  the  agents. 

Dealer  Helps. — The  American  manufacturer  furnished,  in 
addition  to  the  consumer  literature,  electrotypes  of  products  and 
advertisements  with  consumer  appeal  in  Spanish.  These  were 
so  plated  as  to  allow  the  dealer's  name  to  be  the  prominent 
feature.  The  agent  assumed  for  his  own  expense  all  paid  local 
advertisements,  which  are  commonly  a  problem  to  the  manufac- 


TYPICAL  EXPORT  SALES  CAMPAIGNS  307 

turer  until  lie  is  able  from  experience  to  judse  tlieir  effectiveness. 

The  population  of  the  republic  was  3,500,000.  The  sales  in 
the  first  year  were  $1(),()()0.()().  1Mi(\v  should  increase,  with 
nominal  sales  expense,  to  $25,000.00  per  year  within  the  first 
four  years.  Under  at  all  favorable  circumstances  this  ratio  of 
increase  would  be  far  greater,  particularly  as  the  line  was  of  wider 
variety  than  any  competitor. 

Small  Risk  Involved. — The  real  safety  of  the  campaign  came 
through  the  fact  that  its  profits  conmieneed  almost  with  its 
inception.  At  no  time  did  the  American  manufacturer  stand  to 
lose  more  than  a  few  hundred  dollars,  as  against  the  possibilities 
of  profits  on  the  thousands  in  sales. 


CHAPTER  XXVII 

HOW  TO  CONSTRUCT  AN  EXPORT  SALES  CAM- 
PAIGN FOR  A  SPECIALTY 

"Behind  the  American  export  sales  campaign  there  should  be 
the  complete  knowledge  of  all  that  is  best  in  American  exporting. 
Each  executive  owes  it  to  others  to  maintain  the  higli  standards 
established  by  their  care  and  thought." — Robert  M.  Eames. 

Three  Absolute  Essentials  in  Exporting.  Faulty  Export  Organization  a 
Barrier  to  Successful  Campaigns.  Changing  Losses  to  Profits  by  Supplying 
Missing  Ingredients  in  Export  Recipes.  Typical  Specialty  Campaign 
Abroad  Given  in  Detail.  Cost  and  Results  Compared.  Year-by-year  Expense 
and  Sales  Comparison  Made.  How  to  Analyze,  Classify  and  Use  Selling 
Points.  How  Advertising,  Salesman,  Correspondence  and  Samples  can  be 
Combined  in  a  Single  Campaign.     Cooperation  with  Resident  Agent  Portrayed. 

There  are  three  absolute  essentials  with  which  any  manufac- 
turer must  comply  in  order  to  have  valid  hopes  of  a  profitable 
foreign  business.     In  order  of  importance  these  are: 

1.  Honest  products 

2.  Honest  policies 

3.  A  real  desire  for  export  sales. 

Too  many  beginners  in  the  foreign  fields  stop  with  these  three, 
and  having  passed  a  vote  of  confidence  in  their  products,  policies 
and  export  ambitions,  sit  back  and  await  applause  in  the  form  of 
orders. 

Sales  Effort  Essential. — The  great  majority  of  goods  must  be 
sold.  Aside  from  novelties,  and  a  few  American-made  special- 
ties which  serve  purposes  not  met  by  other  domestic  or  foreign 
products,  it  is  a  truism  that  any  one  must  prove  himself  a  better 
salesman  in  order  to  wrest  foreign  trade  away  from  those  who 
now  hold  it.  In  the  surface  details  of  exporting  (which  cover 
correct  shipping,  packing,  invoicing,  translating  and  commercial 
practice)  the  latter  are  practically  perfect;  in  values  given  and 
prices  asked  they  at  least  meet  the  market.  The  American 
manufacturer  who  wants  to  export,  therefore,  must  meet  this 
excellence  in  surface  details  and  products,  and  add  something 
tangible  and  attractive  in  order  to  supplant  foreign  rivals. 

Management  Viewpoint. — One  tendency  in  domestic  business 

308 


A  SPECIALTY  EXPORT  CAMPAIGN  309 

has  militated  against  great  success  in  our  foreign  endeavors. 
This  tendency  is  the  creation  of  speciahsts  as  department  heads 
to  carry  out  the  pohcies  laid  down  by  boards  of  directors  and 
executives.  When  entering  the  foreign  field  the  natural  course 
is  to  carry  over  this  policy  and  either  hire  an  outside  man  with 
export  experience  or  promote  some  employee  to  the  export 
manager's  position.  At  once  a  serious  source  of  loss  is  almost 
certain  to  result,  for  unless  the  highest  officials  of  the  business 
take  time  to  learn  their  export  possibilities  and  lay  plans  to 
capitalize  these,  real  progress  is  impossible. 

An  outsider,  no  matter  how  well  informed  he  may  be  on  export 
markets,  will  have  much  to  learn  of  the  business,  particularly 
as  to  the  degree  of  cooperation  he  can  secure.  A  promoted 
employee  can  hardly  be  expected  to  have  the  broad  viewpoint 
necessary  to  plan  a  campaign  which  will  make  proper  use  of  the 
four  sales  forces.  It  is  essential  that  export  activities  be  based 
on  something  more  than  a  prejudice  in  favor  of  correspondence, 
salesmen  or  advertising  as  the  proper  selling  agency,  and  that 
some  method  be  adopted  to  insure  that  expenditure  shall  not 
be  a  haphazard  spreading  of  appropriations.  Well  balanced 
campaigns  are  needed.  The  novice  must  beware  of  consider- 
ing any  one  agency,  correspondence,  sales  or  advertising  as 
sufficient  or  of  preponderating  value. 

A  CAMPAIGN  THAT  FAILED 

The  failure  of  an  export  effort  made  by  a  manufacturer  of 
power  boats  can  be  examined  with  profit.  In  this  failure  the 
maker  should  shoulder  the  blame,  as  the  methods  used  were 
unsuitable.  In  1910  the  western  salesmanager  of  a  valuable 
export  publication  became  interested  in  foreign  markets  for 
American  motor  craft.  He  made  an  exhaustive  study,  not 
only  of  actual  imports  into  every  foreign  country,  but  also 
of  local  production  within  each  country.  Through  corre- 
spondents and  agents,  the  class  of  men  who  would  naturally 
be  most  interested  in  the  use  of  power  boats  was  consulted. 
An  amazingly  complete  volume  of  specific  data  was  secured 
and  collated. 

Excellent  Results  from  Advertising. — With  this  report  the 
export  journal's  representative  convinced  an  American  manu- 
facturer that  the  possible  profits  were  worthwhile.     He  proved 


310  EXPORT  MERCHANDISING 

that  the  advertising  medium  would  reach  prospective  l)uyers 
of  his  boats.  A  contract  was  signed  for  twelve  full  pages  and  the 
manufacturer  promised  to  give  all  inquiries  prompt  attention. 
From  time  to  time  the  magazine  forwarded  names  of  interested 
parties,  and  through  its  translation  bureau  learned  that  the 
advertisements  had  attracted  favorable  attention  and  had  led 
to  several  hundred  promising  inquiries.  At  the  end  of  six  months 
a  telegram  from  the  power  boat  maker  requested  an  immediate 
conference  on  a  matter  of  great  importance. 

The  representative  of  the  export  journal  found  on  his  arrival 
that  out  of  all  the  correspondence  received  the  manufacturer 
had  answered  only  those  letters  which  contained  actual  orders, 
and  that  all  orders  had  been  filled  without  the  slightest  credit 
investigation.  The  explanation  was  amazing:  "We  haven't 
any  force  to  answer  inquiries  in  a  foreign  language.  We  felt 
that  if  'these  people'  were  really  interested  they  would  order. 
We  thought  your  subscribers  were  honest.  We  didn't  want  to 
insult  them  by  holding  up  their  orders  while  we  wrote  them  for 
references.  One  firm  ordered  six  boats,  and  we  shipped  them. 
The  invoice  is  now  due  on  our  thirty-day  terms,  and  they  have 
not  paid;  nor  do  they  answer  our  letters." 

An  Incorrect  Deduction. — To  complete  the  story,  the  invoice 
was  never  paid.  The  advertising  was  counted  a  failure,  from  the 
maker's  standpoint,  and  another  reliable  firm  joined  the  ranks 
of  those  who  declare:  ''There's  nothing  in  exporting;  we've 
tried  it,  and  we  know." 

On  a  conservative  estimate,  based  on  the  experience  of  another 
power  boat  maker  (who  used  half  as  much  space  in  the  same 
magazine  at  the  same  time),  the  inquiries  received  should  have 
resulted  in  legitimate  orders  amounting  to  over  $30,000.  This 
second  manufacturer  was  also  a  new  exporter,  but  he  realized 
that  advertising  alone  could  not  bring  100  per  cent  results.  So 
he  added  two  salesmen  to  travel  in  the  covmtries  from  which  the 
inquiries  received  indicated  the  greatest  possibilities  of  sales. 

Changing  Failure  into  Success. — A  New  England  maker  of 
shoes  averted  a  similar  failure  after  undue  reliance  upon  corre- 
spondence alone  to  close  sales.  He  sought  sales  in  highly  com- 
petitive foreign  cities.  His  well-handled  letters  secured  several 
trial  orders  and  a  few  real  customers,  but  as  a  whole  the  results 
did  not  justify  his  expenditure  of  time  and  money.  He  had 
ample   financial   resources,    and   knew   that   a   competitor   was 


A  SPE(  7  A  LTY  EXPOR  T  CA  MP  A  KIN  3 1 1 

steadily  increasing  its  export  sales.  Pride  forbade  his  abiding 
by  the  results  of  his  first  tests.  When  experience  demonstrated 
that  unsupported  correspondence  was  not  a  paying  proposition, 
because  of  the  greater  efforts  of  competition,  he  balanced  up  his 
campaign  with  local  advertising  and  the  services  of  two  combina- 
tion salesman.  Shortly  afterwards  his  profit  column  began  to 
show  pleasing  figures.  He  is  now  well  satisfied  with  the  results 
in  the  foreign  field. 

Those  who  feel  that  salesmen  are  the  last  word  in  any  merchan- 
dising, either  at  home  or  abroad,  may  be  shocked  to  learn  that 
the  losses  coming  from  the  exclusive  use  of  salesmen  abroad  are 
probably  greater  than  those  resulting  from  either  correspondence 
or  advertising  failures.  This  is  due,  of  course,  to  the  greater 
investment  involved  by  the  salesman's  salary  and  expenses. 

Why  Salesmen  Sometimes  Prove  Costly. — Time  after  time, 
American  manufacturers  have  sent  salesmen — good,  bad  and 
indifferent — to  Europe  and  South  America  (strangely,  seldom 
elsewhere  without  good  reason)  without  dependable  advance 
knowledge  of  conditions  or  adequate  authority  to  deal  with  them, 
and  have  reaped  a  harvest  of  losses.  Often  the  reason  was  lack 
of  preparation.  Still  more  often  the  salesman  was  driven  to 
abandon  direct  selling  to  make  friends  for  his  house.  Dealers 
who  had  been  promised  regular  visits,  consumer  helps,  advertising 
and  what  not  by  preceding  travelers,  absolutely  refused  to  deal 
with  a  new  firm  whose  salesman  was  the  first  to  acquaint  them 
with  its  existence.  One  salesman  who  started  out  with  the 
samples  of  eight  Chicago  manufacturers  did  not  make  even  one 
sale  on  the  west  coast  of  South  America,  except  orders  conditional 
on  consignment,  because  his  houses  had  failed  to  use  either 
correspondence  or  advertising  to  introduce  themselves  and  thus 
make  it  possible  for  him  to  talk  goods  and  prices  on  his  first 
trip. 

These  specimen  failures  indicate  that,  except  with  unusual 
products  and  under  unusual  conditions,  no  one  selling  force  is 
sufficient.  But  it  is  not  enough  to  admit  this,  and  act  on  it. 
The  correct  proportion,  order  and  correlation  for  using  all  three 
must  be  determined  before  really  efficient  export  work  can 
be  begun. 

Latent  American  Potentialities. — Fortunately,  it  is  true  that 
where  the  American  inanufactunM-  is  weakest  in  fact  (this  does 
not  apply  to  the  ])est  of  American  exporters  who  are  tlie  })est 


312  EXPORT  MERCHANDISING 

exporters  in  the  world)  he  is  strongest  in  potentialities. 
Sound  exporting  is  a  question  of  combining  the  known  factors 
of  good  goods,  wise  policies  and  a  knowledge  of  selling  tactics 
and  to  solve  export  problems  as  they  arise.  Add  intelligence 
and  hard  work  to  the  desire  for  foreign  business,  and  the 
formula   is    complete. 

The  broad  question  of  universal  export  trade  is  not  in  question. 
It  is  the  problem  of  the  methods  to  employ  in  specific  markets 
known  to  be  worth  special  attention,  which  should  be  analyzed 
in  the  light  of  their  possibilities.  Buenos  Aires  is  coming  to  be 
known  for  what  it  really  is — a  city  of  1,700,000 — with  buildings, 
public  service  companies  and  inhabitants  typical  of  the  leading 
cities  of  the  world.  It  offers  a  market  for  everything  for  which 
Boston,  New  York  or  Chicago  is  a  market.  There  is  no  question 
whether  Buenos  Aires  will  buy  cash  registers  or  safety  razors, 
artificial  wall  board  or  toilet  articles —  it  has,  does  and  will. 

BUILDING  A  SPECIALTY  CAMPAIGN 

With  these  facts  in  mind,  how  should  an  American  maker 
proceed  to  develop  his  share  of  prospective  trade  for  a  line  of 
dictating  machines?  To  secure  an  adequate  idea  of  the  size  of 
the  market  (ignoring  the  possibility  of  locally-made  typewriters) 
the  total  imports  for  ten  years  of  typewriters  into  Argentina  should 
be  studied.  These  figures  can  be  obtained  from  the  Pan-Ameri- 
can Union  or  the  Bureau  of  Foreign  and  Domestic  Commerce, 
both  in  Washington.  Additional  information  can  be  obtained 
through  our  Government  in  regard  to  competing  machines  of 
foreign  manufacture  in  use  in  the  Argentine.  From  the  two 
leading  export  service  institutions — the  National  Association  of 
Manufacturers  and  the  Philadelphia  Commercial  Museum — 
data  can  be  obtained  which  will  enable  the  manufacturer  to 
make  f.o.b.  New  York  quotations  and  to  approximate  the  laid- 
down  cost,  duty  paid,  in  Buenos  Aires. 

Pre-campaign  Decisions. — It  can  be  assumed  that  a  decision 
is  made  against  elimination  of  direct  sales  to  consumers  and 
against  the  establishment  of  a  branch  house  in  the  Argentine. 
This  would  limit  the  field  to  the  question  of  agency  handling  or 
general  trade  distriluition.  To  decide  this  wisely,  the  nature 
of  our  product  nuist  furnish  the  answer.  Is  the  article  one  which 
demands  a  central  stock  from  which  retailers  and  even  whole- 


A  SPECIALTY  EXPORT  CAMPAIGN  313 

salcrs  can  be  supplied?  Docs  it  demand  widespread  trade  dis- 
tribution? Can  it  be  sold  direct  to  dealers  without  the  necessity 
of  a  central  stock?  Can  it  be  sold  to  best  advantage  by  a  single 
agency  deahng  direct  with  users?  Does  it  require  an  exclusive 
service  bureau  for  instruction  and  repairs? 

Any  good  line  of  dictating  machines  obviously  falls  into  the 
latter  class.  Following  domestic  precedent,  it  should  be  sold 
by  an  exclusive  agent  direct  to  the  offices  where  it  will  be  used, 
rather  than  distributed  to  dealers  to  re-sell.  This  decision  made, 
the  next  problem  is  to  find  the  agent  who  will  best  serve  the 
manufacturer's  interests  by  securing  the  sales  volume  to  which 
it  is  entitled  by  the  service  he  is  prepared  to  render  and  the 
possibilities  of  Buenos  Aires. 

Market  Analysis. — The  market  itself  demands  further  an- 
alysis. A  stock  of  dictating  machines  in  Buenos  Aires  will  be  an 
essential,  together  with  a  repair  department  and  esalesmen  capable 
of  presenting  the  economics  and  advantages  of  the  device  to  users. 
Further,  it  becomes  apparent  that  in  a  city  of  1,700,000  the 
maker  must  do  more  than  grant  an  exclusive  agency.  The  size 
of  the  market  forbids  its  quick  covering  by  any  sales  force  the 
manager  can  expect  an  agent  to  employ.  From  the  start,  the 
maker  will  be  forced  to  build  his  compaign  on  a  combination  of 
sales  methods  determined  by  knowledge  of  what  each  will  do  in 
conjunction  with  the  others. 

How  shall  the  manufacturer  proceed  in  his  efforts  to  secure  a 
suitable  agent?  From  lists  of  manufacturers'  representatives 
and  agents  for  such  lines  as  typewriters,  adding  machines  and 
office  appliances  he  can  select  these  firms  which  credit  reports  on 
file  with  export  institutions  prove  to  be  long-established,  honest 
and  of  adequate  financial  resources. 

Avoiding  Cheapening  an  Agency. — If  he  cared  to  write  all 
prospective  agents  it  would  be  a  simple  matter  of  preparing  a 
form  letter  in  Spanish,  setting  forth  his  proposals  and  asking 
for  a  decision.  This  would  be  a  lazy  man's  method,  sure  to  result 
in  complications  and  recriminations.  Sooner  or  later  it  would  be 
common  knowledge  in  trade  circles  that  the  American  manu- 
facturer was  offering  his  agency  broadcast.  The  natural  con- 
clusion would  be  that  it  was  not  worth  considering. 

Again,  he  might  use  the  Buenos  Aires  newspapers  or  American 
export  trade  journals  to  make  known  his  desires.  This  would  be 
preferable  to  the  form  letter  method,  but  still  would  prove  unsatis- 


314  EXrORT  MKRCIIANDISING 

factory  for  lack  of  surety  that  it  would  appeal  to  the  one  best  fitted 
for  the  agency.  The  method  which  would  be  highly  desirable 
in  seeking  dealer  orders  nn"ghl  well  be  suicidal  in  a  search  for  an 
exclusive  agent. 

Estimating  Probable  Sales. — In  general,  every  manufacturer 
should  know  what  qualifications  an  agent  must  possess. 
Before  approaching  him  it  must  be  decided  what  the  manufacturer 
can  offer  an  agent.  Based  on  investigation  of  the  market, 
as  indicated  by  the  typewriters  in  use,  modified  by  what  has  been 
learned  of  local  conditions,  tariff  duties,  commercial  practice  and 
like  details,  the  maker  can  estimate  probable  sales,  so  that  he  may 
determine  the  amount  which  he  can  expend  with  a  fair  chance  of 
return.  This  can  be  considered  over  a  five-year  period,  as  the 
heaviest  expense  is  certain  to  come  at  the  start,  when  the  prob- 
able returns  are  the  least.  If  such  estimates  were  mere  crude 
guesswork,  any  manufacturer  would  feel  disinclined  to  plan  a 
comprehensive  campaign  inmiediately.  In  a  proved  market 
his  product  might  fail  utterly  if  he  refused  to  consider  a  greater 
expense  than  descriptive  literature  in  Spanish,  a  few  letters  and  a 
demonstrating  machine  for  his  agent.  An  introductory  cam- 
paign of  merit  carrying  with  it  his  cooperation  would  probably 
win  acceptance  from  whatever  agent  he  selected,  and  on  the 
agent's  part  the  expenditure  of  sufficient  energy  and  capital  as 
would  insure  success.  All  of  which  points  to  the  sending  of  a 
personal  representative  to  examine  the  ground,  select  the  agent, 
and  cooperate  in  the  introductory  work  that  counts  for  so  much 
in  the  final  results. 

Cooperation  the  Manufacturer  Can  Extend. — What,  then,  can 
he  offer  an  agent?  First,  and  of  greatest  importance,  profits 
arising  from  the  exclusive  control  of  the  dictating  machine  for  ten 
years.  Beyond  this  can  also  be  offered  the  assistance  of  a  trained 
salesman  in  making  first  sales,  training  other  salesmen  and  estab- 
lishing a  service  and  repair  department.  Certainly  the  maker 
can  afford  to  write  direct  to  business  enterprises  in  Buenos  Aires 
selected  because  of  their  known  capacity  or  prestige.  Likewise, 
he  can  capitalize  his  domestic  experience  in  newspaper,  magazine 
and  outdoor  publicity  and  in  booklets,  bulletins  and  circulars 
directed  at  users,  including  testimonials  to  add  to  the  agent's 
claim  that  the  dictating  machine  has  been  tested  and  approved 
in  actual  use. 

To  an  honest  product,  an  honest  policy  and  a  desire  for  export 


A  SPECIALTY  EXPORT  CAMPAIGN  315 

trade  the  manufacturer  can  add  endeavor  and  intelligence,  and 
bring  to  his  agent  the  assistance  of  the  spoken  word  (the  sales- 
man), the  written  word  (letters  to  possible^  buyers)  and  the 
printed  word,  as  typified  by  our  advertising  plans.  Th(;  manu- 
facturer has  value  to  offer  and  has  a  right  to  expect  value  in 
return. 

Value  of  Specific  Offers. — Besides  this  bare  outline  of  the  basic 
plan,  the  American  maker  must  place  in  his  salesman's  hands 
the  means  of  securing  decisive  action.  Too  often  a  campaign 
entirely  sound  in  plan  is  expressed  in  generalities.  Where 
specific  pledges  are  expected  from  an  agent,  the  proposition  on 
which  his  action  is  to  be  based  must  give  a  certainty  in  return — 
that  is  only  logic. 

ESTIMATING  THE  SELLING  COST 

It  may  serve  a  useful  purpose  to  show  rough  estimates  of  the 
cost  of  launching  a  specialty  in  such  a  market  as  that  of  the 
Argentine.  If  it  is  assumed  that  the  possibility  exists  of  selling 
20,000  $150  machines  in  ten  years — a  S3, 000,000  market — domes- 
tic experience  prompts  on  a  $150,000  sales  quota  for  the  first  five 
years,  to  appropriate  .$15,000  for  promotion  expenses  the  first 
year.     This  could  l)e  divided: 

Six  months'  salary  to  salesman %  2, .WO 

Six  months'  expenses  at  $15  a  day 2 .  700 

Correspondence  with  consumers 1 ,500 

Advertising,  including  literature 5 ,  000 

Costs     of     demonstration,     entertainment,     sample 

machines,  etc 3 ,  300 

$15,000 

Substantial  Reduction  in  Second  Year  Budget. — This  first 
year's  schedule  is  by  no  means  the  yearly  guide.  The  second 
year's  balance  sheet,  for  example,  will  show  for  Argentine 
expenses : 

Six  weeks'  share  of  salesman's  South  American  trip.  .  $     600 

Expenses,  fourty-two  days,  at  $20  a  day 840 

Correspondence  with  consumers 3 ,  000 

Advertising 3 ,000 

.$7,440 


316  EXPORT  MERCHANDISING 

This  is  a  falling  off  of  over  50  per  cent.  It  will  l)e  noted  that 
the  sales  attack  has  shifted  so  that  direct  correspondence  has 
doubled,  while  advertising  bills  have  been  cut  two-fifths.  The 
expense  of  demonstrations  and  entertainment  have  been  diverted 
to  the  agent,  while  the  salesman  spends  only  one-fourth  of  the 
first  year's  time,  mainly  in  "closing"  difficult  prospects  and 
coaching  the  agents'  sales  force. 

A  third  year's  outlay  would  be  similar,  except  for  the  reduction 
of  correspondence  to  about  $1,000,  as  the  agent's  salesmen  cut  the 
mailing  list  by  eliminating  the  firms  not  worth  continued  effort. 
The  $3,000  advertising  item  would  be  as  high  as  it  would  ever 
become,  unless  sales  ran  unexpectedly  low,  requiring  extra 
publicity. 

SUMMARIZING  THE  MAKER'S  OFFER 

The  offer  to  the  prospective  agent  would  be : 

1.  Exclusive  rights  for  ten  years 

2.  Six  months'  service  of  one  salesman  the  first  year 

3.  $5,000  in  varied  forms  of  publicity  the  first  year 

4.  The  backing  of  correspondence  department  in  writing  10,000  prospects 

5.  Ten  demonstrating  outfits  free,  entertainment  of  twenty  largest  users 
of  typewriters,  and  the  expense  of  hiiring  temporary  quarters  for  tests  to 
prove  to  these  the  economy  and  other  advantages  of  the  device. 

There  should  l)e  outlined  exactly  what  the  maker  would  do  for 
his  agent  in  each  of  the  ten  years  of  the  arrangement. 

Obligations  of  Agent. — From  the  agent  he  would  expect  in 
return : 

1.  Orders  totalling  $10,000  in  the  first  year,  $20,000  in  the  second  year 
and  $25,000  in  the  third  year,  and  from  third  to  tenth  years  an  annual 
increase  of  10  per  cent  over  the  preceding  year. 

2.  The  assumption  of  demonstrating  expenses  and  entertainment  after 
the  first  year. 

3.  The  placing  of  advertising  based  on  5  per  cent  of  sales,  plus  the  agent's 
own  appropriation  after  the  third  year. 

There  would  be  many  other  clauses  in  the  agreement  covering 
prices,  terms,  cancellation  and  non-acceptance  of  competing 
agencies,  but  the  most  important  clause  is  the  guaranteed  yearly 
purchases  in  return  for  guaranteed  territory  and  assistance. 

Advertising  Helps. — A  complete  advance  layout  of  the  adver- 
tising campaign  would  fill  a  one-hundred-page  loose-leaf  book. 
Therefore,  only  the  selling  arguments  which  can  be  most  effect- 


A  SPECIALTY  EXPORT  CAMPAIGN  317 

ively  presented  by  the  printed  word  will  be  described,  in  the  reali- 
zation that  the  criticism  of  the  agent,  local  advertising  agencies 
and  the  salesman  will  furnish  material  and  suggestions  for  improve- 
ment. Often  in  one  market  the  most  productive  appeal  may  be 
one  that  is  negligible  elsewhere.  Above  all,  the  maker  must  base 
his  arguments  on  his  competition  or  lack  of  it.  If  he  is  first  to 
enter  the  market  he  must  first  sell  the  idea  behind  his  machines. 
Where  competition  exists,  it  may  be  wise  to  emphasize  the 
exclusive  features  which  are  lacking  in  a  rival — though  it  is  poor 
business  to  advertise  the  rival  by  over-comparison. 

Making  Correspondence  Count. — Correspondence  with  users 
is  an  important  feature  of  promotion  work  in  cooperation  with 
the  agent.  He  can  pay  visit  after  visit  by  mail,  fanning  the 
faint  spark  of  interest  created  by  the  agent  and  his  force  into 
the  flame  of  desire.  He  can  use  letters  under  first-class  postage, 
circular  matter,  booklets,  private  mailing  cards  and  bulletins 
in  this  mail  attack :  Hence  he  has  ample  scope  for  ingenuity  in 
presenting  his  arguments  without  wearying  his  prospects. 

CHARTING  SALES  ARGUMENTS 

Such  an  analysis  of  selling  points  might  run,  roughly,  as  follows: 

1.  Economy — Stenographers'  time  devoted  solely  to  transcription 

2.  Economy — Typist  at  lower  salary  than  shorthand  operator 

3.  Economy — Dictator  need  not  repeat,  as  typist  can  repeat  record 

4.  Economy — Machines'  speed  exceeds  human  capacity 

5.  Economy — Even  division  of  dictation;  any  record  can  be  transcribed 
by  any  typist 

6.  Convenience — Dictation  possible  before  and  after  typist's  hours 

7.  Convenience — Dictation  possible  while  typist  is  transcribing  rush 
matter 

8.  Convenience — Home  dictation  possible  by  extra  recording  set 

9.  Convenience — Absence  of  the  waiting  pencil  while  dictating  compli- 
cated documents 

10.  Safety — Illness  or  accident  to  any  operator  leaves  matter  understand- 
able to  any  typist 

11.  Progressiveness — In  line  with  other  advances  in  business  machinery. 

Many  of  these  arguments  can  be  developed  indefinitely:  All 
can  be  illustrated  by  photographs  or  drawings,  visualizing  the 
argument  to  be  driven  home.  In  publicity  the  maker  can  appeal 
both  to  the  stenographer  on  the  score  of  increasing  her  produc- 
tivity and  to  the  office  manager  by  showing  savings  made  possible 
by  reduction  of  stenographic  force  and  greater  elasticity. 


318  EXPORT  MERCIIANDlSINd 

Stimulation  of  Agents'  Organization. — No  small  part  of  the 
manufacturer's  correspondence  must  be  devoted  to  the  agent 
and  his  force.  It  is  imperative  to  sell  and  re-sell  the  product  and 
his  veiy  argument  to  them.  When  interest  lags,  they  must  be 
urged  on,  not  only  with  prices  and  contests  but  also  with  con- 
structive letters  showing  the  manner  in  which  different  prospects 
have  been  sold  elsewhere  and  reciting  actual  arguments  which 
have  convinced  hesitating  firms.  It  must  be  remembered  that  an 
agent  is  worthy  of  regard,  that  his  opinions  deserve  respect  and 
that  his  suggestions  deserve  consideration.  Even  while  a  manu- 
facturer may  not  agree  with  some  of  the  agent's  ideas,  it  is  well 
to  accept  his  promotion  plans  whenever  possible  without  undue 
risk.  If  they  fail,  he  will  be  careful  in  future  cases;  if  they 
succeed,  he  will  be  more  of  a  co-partner  than  before.  The  aver- 
age manufacturer  is  too  prone  to  feel  (often  quite  unconsciously) 
that  he  has  discovered  all  the  selling  ideas  for  his  product,  and 
often  offends  agents  and  dealers  by  giving  their  suggestions  scant 
consideration.  To  merely  state  that  anything  "is  against  our 
policy"  is  a  tactless  reply  to  a  suggestion.  If  the  policy  can  not 
be  explained,  it  needs  overhauling. 


CHAPTER  XXVIII 
THE  EXCLUSIVE  EXPORT  AGENT 

"Is  your  agent — tliR  one  who  represents  your  company  abroad — a 
mirrored  reflection  of  all  your  virtues?  If  not,  why  is  he  your 
agent?" — James  B.  Donovan. 

Export  Agents  Classijicd.  Types  of  Export  Agents  Resident  in  the  United 
States.  Types  of  Agents  Resident  Abroad.  Major  Divisions  of  Both  A  nalyzed 
and  Defined.  Illustrations  of  the  Nature  of  the  Relation  Between  American 
Manufacturers  and  the  Several  Classes  of  Agents.  Advantages  and  Dis- 
advantages of  Agents  Who  Purchase  for  Re-sale.  The  American  Selling 
Agency.  The  Export  Company  as  an  Agent.  Classification  of  Agents  Resi- 
dent Abroad.  The  Basis  of  Exclusive  Representation.  Hybrid  Agencies  and 
Their  Advantages. 

A  simple  definition  of  the  export  agent  is,  "one  who  acts  in 
any  selling  capacity  for  the  exporter."  This  definition  has  the 
virtue  of  emphasizing  the  selling  function  of  the  agent  and  is  a 
l)road  enough  definition  to  include  almost  all  the  many  types  of 
agents  whose  variety  perplexes  both  the  novice  and  veteran  in 
expoi'tlng. 

MAJOR  DIVISIONS 

The  first  major  division  of  types  is  based  on  the  location  of  the 
agent.  For  the  export  agent  may,  and  often  does,  have  his 
headquarters,  if  not  his  sole  residence,  in  the  country  of  the 
exporter.     Agents  of  this  type  include: 

1.  The  American  selling  agencj' 

2.  The  export  company 

3.  The  export  house. 

The  agent  abroad  can  be  similarly  classified: 

1.  The  resident  combination  salesman 

2.  The  manufacturers'  representative 

3.  The  general  importer 

4.  The  wholesaler 

5.  The  wholesaler  and  retailer 

6.  The  retailer 

7.  The  consumer. 

319 


320  EXPORT  MERCHANDISING 

The  sccoiul  nuijor  division  is  based  on  the  relation  of  the 
agent  to  the  exporter.  This  division  is  one  which  contains  but 
three  classes: 

1.  Those  who  sell  for  the  account  of  the  exporter 

2.  Those  who  buy  from  the  exporter  and  re-sell 

3.  Those  who  buy  but  do  not  re-sell. 

It  is  obvious  that  each  agent  must  be  included  in  both  of  these 
major  divisions.  The  export  house  in  the  United  States  supplies 
the  most  common  example;  for  its  residence  is  in  the  country  of 
the  seller  and  it  buys  from  the  exporter  for  purposes  of  re-sale 
outside  the  United  States.  It  must  be  remembered  that  the 
relation  is  not  an  agency  relation,  however,  unless  there  are 
exclusive  territorial  rights  involved.  Otherwise,  the  relation 
is  a  pure  buyer  and  seller  relation. 

Why  Exporters  Are  Puzzled. — It  is  undeniable  that  there  is 
great  confusion  in  export  circles  in  regard  to  the  desirability  or 
non-desirability  of  the  use  of  agents.  The  greater  part  of  this 
confusion  is  due  to  the  failure  of  many  to  recognize  the  existence 
of  the  second  major  division.  It  is  well  to  repeat  this  second 
major  division  to  emphasize  its  existence: 

1.  Those  who  sell  for  the  account  of  the  exporter 

2.  Those  who  buy  from  the  exporter  and  re-sell 

3.  Those  who  buy  but  do  not  re-sell. 

To  make  the  distinction  entirely  clear,  it  is  fair  to  consider  the 
first  group  as  an  extension  of  the  selling  force  of  the  exporter  and 
to  consider  the  second  group  as  an  extension  of  the  customers  of 
the  exporter. 

AGENCY  TYPES  DIFFERENTIATED 

To  illustrate:  It  can  be  assumed  that  in  Lima,  Peru,  there  is 
an  individual  named  John  Jones.  He  makes  his  living  by  selling 
American-made  goods  to  the  merchants  of  Lima.  He  does  not 
carry  stocks  of  merchandise,  but  merely  solicits  orders  for  direct 
shipment  from  the  manufacturer  to  individual  merchants. 
There  merchants  are  billed  direct  by  the  manufacturers.  John 
Jones  limits  his  activities  to  the  sale  of  the  products  of  six  Ameri- 
can manufacturers.  These  six  American  manufacturers  recog- 
nize him  by  commissions  on  the  sales  which  he  makes  and  also 
on  any  other  shipments  which  they  make  to  Lima. 


THE  EXCLUSIVE  EXPORT  AGENT  321 

The  Resident  Combination  Salesman. — John  Jones  is  ch^arl}^ 
the  agent  of  these  six  American  manufacturers.  He  is  "one 
who  acts  in  a  selling  capacity  for  the  exporter."  If  his  relation 
to  the  exporter  is  analyzed  it  will  be  seen  that  in  reality  he  is  a 
resident  combination  salesman.  He  is  an  individual  selling 
agency  resident  in  the  country  of  his  customers. 

To  illustrate  further:  Henry  Smith  has  an  office  on  Broadway, 
New  York  City.  He  specializes  on  sales  in  China.  He  repre- 
sents a  dozen  American  manufacturers  and  has  established  in 
China  several  scores  of  customers  who  usually  accept  his  advice 
in  connection  with  their  purchases  of  American  goods.  He  has  a 
carefully  built  up  mailing  list  containing  the  names  of  hundreds 
of  native  and  European  firms  in  China.  He  advertises  in  China 
the  products  of  the  American  manufacturers  whom  he  represents. 
He  solicits  orders  for  his  principals.  He  carries  no  stocks  and 
merely  refers  the  orders  he  receives  to  the  manufacturers.  On 
analysis,  it  will  be  seen  that  Henry  Smith  is  a  combination  export 
sales  manager  resident  in  the  country  of  the  manufacturer.  He 
is  an  export  agent,  but  purely  an  export  selling  agent. 

Wholesalers  as  Representatives. — A  single  example  will  differ- 
entiate these  two  types  of  agent — the  combination  export  sales- 
man resident  abroad  and  the  combination  export  sales  manager 
resident  in  the  United  States — from  the  agent  of  the  older  type. 
Enrique  Gonzales  y  Cia,  of  Valparaiso,  Chile,  are  wholesalers. 
They  specialize  in  the  handling  of  Ijranded  merchandise.  They 
do  not  confine  their  importations  to  products  of  any  one  country, 
but  they  do  confine  their  importations  to  one  maker  in  each 
product  in  exchange  for  the  exclusive  sales  rights  in  Chile  for 
each  product  which  they  handle.  It  can  be  assumed  that  they 
are  agents  for  Fownes'  gloves,  Pinaud's  toilet  preparations,  an 
Italian  olive  oil,  Gillette  safety  razors  and  Regal  shoes.  They 
do  not  handle  competitive  lines.  They  offer,  in  return  for  exclu- 
sive rights  for  the  products  which  they  handle,  guaranteed  pin-- 
chases  each  year.  They  buy  for  their  own  account,  and  re-sell 
not  only  to  retailers  but  also,  in  some  cases,  sell  to  other  whole- 
salers at  a  nominal  profit.  The  manufacturers  they  represent 
have  only  one  account  in  Chile — the  agents  themselves^ — and 
all  goods  are  shipped  and  billed  direct  to  the  agents. 

This  example  clearly  differentiates  the  agent  who  buys  for 
his  own  account  from  the  agent  whose  function  is  solely  that  of 
selling.     For  purpose  of  differentiation,  it  would  be  well  for  all 

21 


322  EXPORT  MERCHANDISING 

interested  in  exporting  to  term  one  the  "customer  agent"  and 
the  other  the  "selHng  agent." 

The  Function  of  the  Export  House. — It  is  well  to  analyze  for  a 
moment  the  status  of  the  export  house  in  the  United  States  in 
the  agency  field.  In  theory,  and  often  in  practice,  the  export 
house  is  the  exact  reverse  of  the  export  combination  salesman 
resident  abroad.  For  the  function  of  the  export  house  in  many 
cases  is  that  of  a  buyer  resident  in  the  United  States  in  the  interest 
of  the  foreign  merchant.  This  is  clearly  proved  by  the  fact  that 
the  export  house  charges  its  merchant  customers  for  its  services 
as  a  buyer,  this  charge  being  quite  frequently  2}^  per  cent  of  the 
invoice  price. 

Export  houses  usually  specialize  either  on  certain  products  or 
on  certain  territories,  or  on  certain  products  in  certain  territories. 
From  their  very  different  knowledge  of  the  needs  and  wants, 
tastes  and  whims  of  the  markets  they  serve,  they  are  often  in  a 
position  which  makes  them  desirous  to  control  some  manufac- 
turer's product  in  certain  territories.  They  offer  in  exchange 
for  an  exclusive  arrangement,  guaranteed  sales  and  the  certainty 
of  immediate  distribution.  But  it  is  only  fair  to  note  that  there 
is  a  confusion  of  relations  brought  into  being  by  their  acceptance 
of  an  agency.  With  some  few  non-competitive  products — prod- 
ucts which  are  alone  in  their  uniqueness — the  export  house  can 
retain  its  position  as  buying  representative  for  foreign  merchants. 
But  with  the  majority  of  products,  the  acceptance  of  an  agency  to 
the  export  house  bars  its  own  clients  from  a  free  and  full  choice 
of  competitive  articles. 

With  the  entering  into  exclusive  arrangements  with  the  Ameri- 
can manufacturer,  the  obligations  of  the  export  house  become 
divided  between  maker  and  merchant.  It  is  not  to  be  gainsaid 
that,  even  in  the  face  of  the  manifest  ambiguity  of  such  dual 
relations,  there  are  many  instances  which  prove  that  both 
parties  have  been  well  served. 

Another  Type  of  "Customer  Agent." — A  more  common  case  of 
the  "customer  agent"  than  that  of  the  Enrique  Gonzales  y  Cia 
example  is  the  agent  who  purchases  for  his  own  account  for 
resale,  but  who  also  permits  direct  sales  b}^  the  American  manu- 
facturer in  his  territory,  and  who  receives  both  price  protection 
and  a  commission  on  such  direct  sales.  Such  a  plan  promises 
mutual  advantages.  From  the  manufacturer's  standpoint  it 
divides  the  credit  risk  by  multiplying  the  number  of  his  customers 


THE  EXCLUSIVE  EXPORT  AGENT  323 

in  Chile,  fur  cxainplc.  It  pcniiits  the  iiuuiulactui'er  to  have 
direct  relations  with  firms  of  such  importance  that  they  miglit 
refuse  to  consider  purchasing  through  an  intermediary.  It  makes 
possible  sales  to  those  who  from  prejudice  would  decline  to  buy 
from  the  "customer  agent." 

Direct  Sales  an  Advantage  to  Agent. — The  "customer  agent" 
appreciates  the  advantages  to  him  of  the  sales,  direct  from  the 
manufacturer,  to  these  three  groups.  First  of  all,  it  enables  him 
to  receive  commissions  without  the  investment  of  his  capital  in 
unusually  large  stocks.  Then  it  brings  in  commissions  from 
sales  to  importers  who  are  equal  in  size  and  importance  and 
with  whom  on  other  lines  he  may  be  in  direct  competition.  Fin- 
ally, it  makes  possible  commissions  on  sales  which  come  from 
firms  with  whom  he  is  not  on  friendly  terms.  Above  all,  from 
the  agent's  standpoint,  it  forces  the  manufacturer  to  greater 
sales  effort  in  order  to  secure  and  develop  these  direct  accounts 
and  thus  gives  the  agent  profits  he  could  neither  afford  to  seek 
nor  expect  success  in  seeking.  Further  than  this,  the  alert 
agent  realized  in  many  lines  that  the  greater  the  direct  distribu- 
tion, the  greater  the  consumer  demand  and  the  lower  the  sales 
expense  on  his  own  sales  to  his  own  customers. 

In  dividing  into  the  two  major  divisions  all  agency  types,  it  was 
pointed  out  that  there  were  three  subdivisions  resident  in  the 
United  States: 

1.  The  American  selling  agency 

2.  The  export  company 

3.  The  export  house. 

THE  FUNCTION  AND  SERVICE  OF  THE  EXPORT  COMPANY 

Of  these,  there  has  been  examined  only  the  export  house  and 
rather  roughly  outlined  the  selling  agency  of  the  type  we  termed 
the  "combination  export  sales  manager  resident  in  the  United 
States."  There  remains  the  export  company  which  buys  for  its 
own  account.  The  export  company  is  thus  clearly  differentiated 
from  the  American  selling  agency  which  performs  only  the  selling 
function,  and  from  the  export  house  which  does  not  buy  for  its 
own  account  but  which  is  the  buyer  for  the  foreign  merchant  and 
merely  carries  out  his  wishes  and  finances  the  transaction. 

The  export  company  is  in  reality  an  exporter  who  does  not 
manufacture  the  goods  it  sells,  but  which  assumes  all  other  func- 


324  EXPORT  MERCHANDISING 

tions  of  the  manufacturing  exporter.  It  carries  stocks  both  at 
home  and  abroad  for  its  own  account.  It  develops  its  own  cus- 
tomers and  appoints  its  own  agents,  and  often  has  its  own  export 
travelers.  It  is  usual  for  the  export  company  to  specialize 
either  on  certain  territories  or  certain  products,  and  to  seek  from 
manufacturers  exclusive  agency  connections.  Not  infrequently, 
an  export  company  will  market  the  entire  production  of  a  mill 
or  factory  or  contract  for  the  surplus  of  a  mill  or  factory  over  its 
domestic  requirements.  When  it  actually  owns  mills  and  fac- 
tories outright,  or  interests  in  mills  or  factories,  it  becomes  to 
that  extent  and  for  such  product  or  products  a  manufacturing 
exporter.  It  may  thus  be  in  part  a  manufacturing  exporter 
while  simultaneously  it  exercises  the  function  of  an  export  com- 
pany for  other  products. 

THE  AGENT  RESIDENT  ABROAD 

The  classification  of  the  agent  resident  abroad  includes: 

1.  The  resident  combination  salesman 

2.  The  manufacturers'  representative 

3.  The  general  importer 

4.  The  wholesaler 

5.  The  wholesaler  and  retailer 

6.  The  retailer 

7.  The  consumer. 

Of  these  seven  classifications,  there  have  been  used  for  illustration 
the  first  and  fourth — the  resident  combination  salesman  and  the 
wholesaler.  It  is  wise  to  ignore  the  export  company  resident 
abroad;  for  the  functions  of  such  a  company  are  practically 
identical  with  those  of  the  export  selling  company  resident  in  the 
United  States. 

The  Manufacturer's  Representative. — The  manufacturers' 
representative  is  in  many  cases  identical  with  the  resident 
combination  salesman.  But  in  a  growing  number  of  cases  the 
manufacturers'  representative  is  less  of  a  traveler  and  more  of 
an  employer  of  travelers.  He  is  more  and  more  opening  sales 
and  display  rooms  and  more  and  more  is  carrying  stocks, 
limited,  perhaps,  in  variety  and  containing  only  articles  in 
greatest  demand,  but  purchased  outright  and  carried  more  for 
accommodation  and  rapid  development  of  sales  than  for  profit. 

The  Overseas  General  Importer. — The  general  importer  as  an 
agent  is  one  of  the  oldest  types  and  one  which  is  declining  rather 


THE  EXCLUSIVE  EXPORT  AGENT  325 

than  advancing  in  favor.  Three  or  four  decades  ago  it  was  not 
uncommon  for  a  single  general  importer  to  be  the  agent  for 
agricultural  machinery,  for  perfumery  and  for  bulk  food  products. 
No  line  was  too  large  and  none  too  small  for  him  to  handle  as 
agent.  His  strength  was  in  his  reputation  in  and  knowledge  of 
the  market  which  he  served.  He  was,  in  many  markets,  as  much 
a  representative  of  the  United  States  or  of  England  as  the  con- 
sular representatives.  The  merchants  regarded  these  general 
importers  as  the  commercial  embassies.  But  with  the  increased 
activities  of  the  export  houses  and  of  the  direct  representatives 
of  manufacturing  exporters,  that  era  passed.  Today,  the 
number  of  American  and  English  general  importers  may  be 
fully  as  great  as  at  any  time  in  history,  but  the  proportion  of 
their  imports  to  the  total  imports  is  small  on  lines  which  they 
represent  as  exclusive  agents. 

"W  and  R"  Agencies. — The  wholesaler  and  retailer  type  of 
agent  was  in  great  vogue  a  decade  or  two  ago.  The  newly 
fledged  manufacturing  exporter  saw  in  this  type  of  agent  an 
ideal  worth  cultivating.  The  wholesaler  and  retailer  bought 
outright,  gave  at  once  distribution  (in  his  home  city)  to  the  con- 
sumer, and  through  his  wholesale  activities  gave  further  distri- 
bution to  outlying  districts.  Almost  invariably  such  agents 
were  strong  financially,  enjoyed  a  deserved  good  reputation  and 
brought  the  products  they  favored  into  quick,  if  limited,  demand. 
In  some  markets  these  wholesale  and  retail  agent  outlets  actually 
sold  other  wholesalers  who  were  willing  to  concede  a  small  profit 
to  the  agent  in  return  for  the  convenience  of  the  stock  which  the 
agent  carried. 

The  great  drawback  to  the  wholesale  and  retail  agent  came  in 
territories  where  the  agent,  while  active  and  able,  was  not  as 
widely  or  as  well  liked  by  retailers  as  the  out-and-out  wholesaler 
who  was  in  no  part  a  competitor.  Agencies  granted  the  com- 
bined wholesaler  and  retailer  in  such  circumstances  very  definitely 
limited  distribution  and  made  it  quite  possible  for  a  later  comer 
in  the  field  to  ignore  all  agency  plans,  sell  all  good  wholesale 
outlets,  and  easily  secure  a  distribution,  well  balanced  and  wide- 
spread, impossible  to  the  product  tied  to  a  limited  outlet.  While 
these  direct  non-agency  efforts  were  high  in  first  cost,  they  very 
generally  proved  profitable  over  a  long  term  of  years.  Because 
of  the  greater  number  of  retail  outlets  obtained  through  sales 
through  all  wholesalers  (except  the  competitive  agent)  general 


326  EXPORT  MKIiCIIANDISING 

advertising  to  consuincrs  was  not  wasteful  and  could  be  effec- 
tively used. 

Retailers  as  Agents. — In  the  lesser  markets  of  the  world  it  is 
often  found  that  the  exclusive  representation  of  the  leading 
retailer  is  more  profitable  than  all  possible  sales  which  would 
exclude  the  leading  retailers.  So  that  the  leading  retailer  would 
have  a  definite  incentive  to  handle  a  manufacturer's  product  to 
the  exclusion  of  all  others,  some  far-sighted  manufacturing  ex- 
porters made  a  practice  of  sacrificing  the  sales  possibilities  of  the 
lesser  outlets  and  granting  the  exclusive  selhng  rights  to  their 
selected  retailer,  and  made  no  other  efforts,  direct  or  through  their 
.agent,  to  secure  sales  through  other  retailers.  With  certain 
products  and  in  certain  lesser  markets  this  practice  has  been 
found  to  be  productive  of  excellent  results. 

Consumer  Exclusives. — On  the  surface,  it  is  absurd  to  consider 
a  consumer  as  an  exclusive  agent.  The  title  ''agent"  is,  indeed, 
a  misnomer  in  connection  with  consumer,  unless  the  "consumer" 
sell  other  consumers — in  which  case  he  becomes  in  reality  a 
retailer.  But  the  maker  of  sugar  mill  machinery  might  well  be 
content  with  the  entire  equipment  of  the  larger  of  two  sugar 
centrals  and  grant  the  exclusive  rights  of  use  to  such  an  "agent." 
This  is  by  no  means  an  unknown  arrangement.  When  it  is 
based  on  careful  study  of  conditions  and  the  agreement  covers 
a  long  period  of  j^ears,  it  is  usually  found  to  have  mutual  advan- 
tages in  exchanging  the  greater  purchasing  power  of  the  "agent" 
for  the  exclusive  features  of  the  products  of  the  manufacturer. 
Dairy  machinery  has  been  marketed  in  many  parts  of  the  world 
on  the  equivalent  of  a  "consumer  agency"  basis. 

It  is  well  to  study  the  fundamental  differences  between  the 
various  forms  of  resident  and  non-resident  agents,  because  only 
through  this  study  is  it  possible  to  weigh  the  relative  desirability 
of  any  one  class  to  the  possible  other  classes.  Further,  it  is 
imperative  that  the  fundamentals  should  be  clearly  seen  before 
the  combination  of  several  classes  in  one  agent  can  be  understood. 
The  lines  of  demarcation  between  a  resident  combination  sales- 
man and  a  manufacturers'  representative  have  been  described, 
as  well  as  the  ease  with  which  one  could  become  the  other.  The 
export  house  has  been  portrayed,  both  as  a  resident  buyer  in  the 
United  States  for  foreign  merchants  and  as  an  agent  for  American 
manufacturers. 

Mixed  Types. — TIkmc  aic  dozens  of  possible  variations.     A 


THE  EXCLUSIVE  EXPORT  AGENT  327 

wholesaler  who  Ijiiys  for  his  own  account  may  be  merely  a  com- 
bination export  salesman  in  connection  with  sales  to  his  own 
government.  In  such  cases  the  agent  merely  submits  samples 
and  quotations,  and  orders  are  placed  direct  with  the  exporting 
manufacturer,  who  ships  and  bills  direct  to  some  government 
department.  An  "export  house"  may  be  in  truth  an  export 
merchant  with  chains  of  stores  in  the  leading  cities  of  his  home 
country,  and  his  New  York  offices  are  merely  buying  offices.  In 
such  a  case  it  is  entirely  conceivable  that  in  granting  an  agency 
it  would  be  parallel  to  granting  an  exclusive  selling  right  to  any 
one  of  the  "chain  stores"  in  the  United  States,  and  have  exactly 
similar  advantages  and  disadvantages. 

It  is  not  at  all  unusual  for  a  combination  export  salesman  resi- 
dent aboard  to  assume  only  for  certain  lines  several  other  func- 
tions. He  may  employ  a  skilled  assistant  in  order  to  introduce 
a  technical  line,  and  carry  a  stock  of  parts  and  do  repairs.  He 
may  also  see  opportunity  for  profit  beyond  mere  commissions 
and  buy  outright,  turning  over  his  complete  purchase  on  arrival, 
and  re-billing  to  his  customers.  Similarly,  an  export  selling 
company  resident  in  the  United  States  may  not  hesitate  to 
depart  from  its  general  policy  and  be  no  more  nor  less  than  a 
salesman,  buying  no  goods  and  acting  merely  in  the  capacity  of 
professional  introducer  of  maker  to  merchant.  This  is  true  in 
markets  in  which  the  selling  company  has  no  direct  connections 
and  in  which  markets  it  does  not  desire  to  act  in  its  broadest 
function. 

Exporter  Must  Study  Agent's  Methods. — Because  of  these 
variants  from  the  regular  channels  of  operation  of  the  several 
types,  it  is  incumbent  on  the  exporter  to  be  certain  not  only  that 
he  is  cognizant  of  the  usual  method  employed  by  the  type  of 
agent  which  he  is  considering,  but  also  that  he  knows  precisely 
the  form  of  activity  which  the  prospective  agent  will  use  if 
entrusted  with  the  agency  for  the  manufacturer's  product.  Hardly 
any  two  American  selling  agencies  operate  along  the  same  lines. 
It  is  safe  to  say  that  no  two  export  companies  employ  exactly 
the  same  general  tactics;  while  among  the  export  houses  which 
depart  from  the  role  of  buyers  for  foreign  merchants  there  is 
absolutely  no  uniformity  of  practice. 

Even  within  any  one  agent's  own  policy  there  will  be  found 
myriads  of  sub-policies.  This  is  particularly  true  in  connection 
with  agencies  wliicOi  are  expanding  their  scope  of  action.     An 


328  EXPORT  MERCHANDISING 

export  company  may  well  have  branch  houses  in  Buenos,  London 
and  Paris  and  yet  be  active  only  by  correspondence  in  Rio, 
Belfast  and  Bordeaux.  It  may  send  its  own  trained  travelers 
to  Cuba  and  Mexico  and  yet  have  second-rate  sub-agents  (and 
these  only  retailers)  in  Costa  Rica  and  Panama.  It  may  adver- 
tise extensively  in  Colombia  and  not  at  all  in  Venezuela.  It 
may  be  ideal  for  an  agency  connection  for  the  maker  of  shoes, 
and  valueness  to  the  maker  of  hoisery  or  garters. 

Importance  of  Knowledge  of  Agent's  Policies. — There  is 
hopeless  chaos  in  nomenclature.  Today,  enterprises  which 
were  proud  a  decade  ago  of  the  title  "Commission  House" 
have  been  humiliated  by  the  war-time  influx  of  the  unworthy 
who  used  the  title.  It  is  not  safe  for  the  exporter  to  feel  today 
that  "Export  Commission  House,"  "Resident  Foreign  Agent, " 
"American  Export  Agent,"  "Export  Merchant,"  "Exporter 
and  Importer"  or  "Indentor"  fully  describes  any  organization. 
Rather  must  the  exact  policies  of  each  export  enterprise  be 
sought  out,  their  methods  of  operation  ascertained  and  their 
exact  functions  made  known.  With  this  data  each  exporter 
can  classify  for  himself,  certain  that  any  general  term  will  con- 
ceal rather  than  reveal  the  exact  nature  of  those  who  might 
become  his  agents. 


CHAPTER  XXIX 

HOW,  WHEN  AND  WHERE  TO  SELECT  AND  COOPERATE 
WITH   AN   EXCLUSIVE   EXPORT   AGENT   RESIDENT 

ABROAD 

"The    problem    of    the    American    people   ...    is    of    flepidiiiK 
upon  tlie  over-seas  markets  whieh  we  wi.sh  to  cultivate.   ..." 

— Edward  N.  Hurley. 

Unsound  Basis  for  Agency  Selection.  Common-sense  Methods  of  Selection. 
Essential  Qualifications  of  Exchisive  Export  Agent.  Importance  of  Credit 
Man  in  Agenctj  Granting.  0.  T.  Erickson's  Explanation  of  Credit  Man's 
Function  in  Agency  Selection.  Modern  Tendencies  in  Types  Approved. 
Advantages  of  Manufacturers'  Representative  Resident  Abroad.  Selling 
Companies  as  Agents.  Examples  of  Methods  Used  by  Leading  Exporting 
Manufacturers  in  Securing  Agents.  Value  of  Supplementary  Evidence. 
Agents'  Commissions  Reduce  Profits.  Costliness  of  Establishing  Unsatisfac- 
tory Agencies.  Fundamentals  of  Agency  Granting.  Cooperation  with  the 
Exclusive  Export  Agent.  Far  Eastern  Agent's  Examples  of  Good  and  Poor 
Co6rdinatio7i  of  Effort.     How  to  Increase  Sales  through  Agents. 

The  shortest  cut  to  quick  profits  from  exporting,  and  often 
the  greatest  obstacle  to  the  greatest  export  profits,  is  the  exchisive 
export  agent.  Wisely  selected,  with  an  eye  to  a  future  decades 
hence  and  in  circumstances  which  dictate  the  appointment,  the 
day~in  and  day-out  presence  in  a  market  of  a  personal  representa- 
tive needs  no  defender.  Selected  in  haste,  without  thorough 
consideration  of  the  representative,  the  product  and  the  market, 
the  exclusive  export  agency  is  the  most  decided  sales  depressant. 

Criticism  of  Haphazard  Methods. — The  average  export 
agency  is  granted  as  the  result  of  a  combination  of  laziness  and 
ignorance.  Laziness,  because  it  is  a  hard,  painstaking  and 
studied  task  to  reach  a  decision  the  correctness  of  which  can  be 
proved.  Ignorance,  because  only  a  very  few  export  executives 
realize  that  the  selection  of  an  agent  or  even  the  decision  in  favor 
or  against  the  idea  of  an  agency  in  a  given  territory,  should  be 
determined  scientifically. 

The  lazy  export  executive  does  not  bother  to  differentiate 
between  the  agent  who  is  a  manufacturers'  representative — in 
other  words,  a  resident  salesman — and  the  merchant  who  is  not. 

329 


330  EXPORT  MERCHANDISING 

The  ignorant  export  executive  is  entirely  unaware  that  tliere  is 
any  difference.     01)vi()usly  tliere  is  a  vvoild  of  (Ustinction. 

The  appointment  of  a  manufacturers'  representative  as  an 
agent  does  not  necessarily  limit  the  number  of  possible  trade 
outlets  for  a  product.  The  appointment  of  even  the  largest 
wholesaler  may  well  bar  a  manufacturer  from  any  sales  to  other 
wholesalers,  and  through  this  disbarment  eliminate  his  products 
from  scores  of  retail  outlets. 

The  Agency  Group. — Manufactured  products  which  require 
technical  skill  in  selling;  which  require  the  establishment  of 
service  depots;  which  require  unusual  investment  by  the  foreign 
merchant;  which  are  sold  to  political  bodies,  quite  naturally  fall 
into  the  agency  group.  Markets  which  are  of  limited  buying 
power;  which  are  distant  from  profitable  routes  for  direct  sales- 
men; which  are  dominated  by  some  large  wholesaler,  are  log- 
ically selected  for  agency  treatment. 

Open  Market  Products. — Conversely,  products  which  are 
commonly  carried  by  all  representative  wholesalers  and  retailers 
in  their  lines  of  trade;  which  depend  upon  small  sales  per  outlet; 
which  require  only  small  investment  to  secure  representative 
stocks,  are,  at  least,  on  the  border-line,  and  no  agency  should  be 
granted  unless  common  sense  evidence  proves  the  need. 

QUALIFICATIONS  OF  THE  EXCLUSIVE  AGENT 

The  good  agent  combines  the  three  C's  of  credit — Character, 
Capability  and  Capital — with  a  thorough  knowledge  of  products, 
policies  and  prices,  an  established  clientele  and  a  wide  and  inti- 
mate acquaintance  with  ways  to  bring  maximum  returns  from  the 
territory  with  which  he  is  entrusted.  The  poor  agent  may  be  a 
crook  who  uses  his  contract  to  stifle  sales.  He  may  be  incom- 
petent. He  may — and  often  is — one  looking  for  easily  made 
profits. 

There  is  one  qualification  that  the  exclusive  export  agent 
must  have.  That  is,  the  ability  to  sell  goods  and  sell  them 
in  a  way  that  insures  the  manufacturer's  future  in  his  terri- 
tory. If  he  is  not  himself  a  salesman,  then  he  must  be  a  capable 
manager  of  his  own  salesmen.  The  agent  must  have  ability 
to  market  the  maker's  product  in  his  territory.  Without  this 
ability,  all  his  accomplishments  can  be  no  more  than  a  beautiful 
frame  without  a  picture.     If  an  agent  is  the  type  that  merely 


now  rO  SELECT  AN  EXCLUSIVE  AGENT  ABROAD     331 

supplies  deiiuind  and  never  creates  demand,  he  is  of  no  greater 
value  than  a  well-placed  vending  machine. 

When  Decision  Should  Be  Deferred. — Usually  either  the 
nature  of  the  product  or  the  nature  of  the  market  indicates 
clearly  the  wisdom  of  some  form  of  agency  relation.  Then  the 
obvious  step  is  to  select  not  only  the  right  type  of  exclusive 
representation,  but  also  the  best  one  of  the  type.  If  a  salesman 
is  to  visit  such  a  market,  any  decision  should  be  reserved  until  he 
has  added  to  the  exporter's  acquired  knowledge  his  first-hand 
impressions  and  facts.  He  may,  in  person,  be  able  to  make  a 
connection  impossible,  even  to  the  most  skilfully  written  letters. 

But  before  his  visit  should  come  investigation.  In  these 
days,  for  a  pittance  it  is  possible  to  survey  the  field  and  weigh 
the  possible  candidates  in  an  accurate  scale.  From  several 
able  sources — notably  The  National  Association  of  Manu- 
facturers and  The  Philadelphia  Commercial  Museum — prefer- 
ably from  both — can  be  secured  lists  of  merchants  as  well  as 
lists  of  manufacturers'  representatives.  These  lists,  with 
accompanying  credit  reports  and  further  credit  reports  from 
Dun  and  Bradstreet,  and  from  the  files  of  the  export  journals 
published  in  this  country  and  from  j^our  bankers,  are  but  a 
start. 

The  experience  of  brother  exporters  should  ])e  sought,  not 
only  for  their  ledger  experience  but  also  for  their  agency  expe- 
rience— two  entirely  different  matters,  in  many  cases. 

THE    CREDIT    MAN'S    PART    IN   SELECTING  EXPORT  EXCLUSIVE 

AGENTS 

With  this  mass  of  data  properly  collected,  the  cooperation  of 
the  foreign  credit  man  should  be  secured.  Too  great  emphasis 
on  this  point  is  impossible.  It  should  he  a  rule  that  no  export 
agencij  should  he  arranged  hefore  the  utmost  assistance  of  the  credit 
man  has  heen  given.  It  is  not  a  mere  matter  of  payments  that  is 
involved.  It  is  squarely  a  matter  of  narrowing  down  the  field 
so  as  to  facilitate  the  proper  choice  of  agency  possibilities  in 
the  given  market,  all  of  whom  may  be  assumed  to  be  good  credit 
risks. 

Looking  into  the  Future. — The  Imsiness  future  of  the  agent 
for  the  term  of  his  contract,  and  far  beyond,  is  too  important  a 
factor  to  be  passed  over  lightl}'.     The  agent  should  l)e  one  who 


332  EXPORT  MERCHANDISING 

will  grow  and  not  diminish  in  importance  in  his  market.  His 
growth  is  an  important  factor  in  the  exporter's  own  reputation — 
in  his  profits — in  his  future.  The  able  credit  man  is  the  best 
prophet.  He  knows  the  language  of  the  financial  statement; 
he  earns  his  living  by  his  ability  to  use  recorded  information 
on  enterprises  and  individuals  so  as  to  gauge  their  business 
ability  as  well  as  their  honesty  and  financial  resources.  When 
he  grants  credit,  at  home  or  abroad,  he  bases  his  decision  on  their 
ability  to  pay  when  the  debt  matures,  not  on  their  ability  to  pay 
on  the  day  on  which  he  grants  credit. 

The  Credit  Man  as  a  Prophet. — From  the  past  and  present  he 
deduces  the  future.  From  the  relation  of  stock  on  hand  to 
accounts  outstanding,  he  reads  the  strength  or  weakness  of  the 
enterprise  in  conducting  its  own  business.  From  the  relation 
of  investment  to  sales,  he  gauges  the  saneness  of  financing. 
From  a  comparison  of  one  prospective  agent  with  the  others  he 
can  predict  accurately,  in  the  great  majority  of  cases,  desirability 
five  or  ten  years  later. 

O.  T.  Erickson,  credit  manager  and  manager  of  foreign  finance 
of  The  Carter's  Ink  Co.,  has  exercised  this  function  in  so  many 
cases  that  his  experience  entitles  his  statement  to  great  weight. 
He  says,  "All  good  credit  men  who  are  familiar  with  export 
selling  appreciate  the  fact  that  their  duties  extend  beyond  the 
mere  passing  for  credit  of  orders  from  foreign  merchants.  This  is 
particularly  true  when  agencies  are  involved.  The  credit  man 
should  welcome  the  opportunity  to  aid  in  the  selection  of  the 
agent  who  will  maintain  or  increase  his  own  importance  in  the 
territory  under  contract.  The  credit  man  should  be  willing 
to  assume  joint  responsibility  in  the  selection  of  an  agent  who 
will  sell  the  most  goods  years  hence  as  well  as  in  the  present. 
The  credit  man  should  gladly  analyze,  if  necessary,  each  agency 
possibility,  tabulate  the  virtues  and  faults  of  each;  not  from  the 
angle  of  the  watch-dog  of  the  treasury,  but  as  counsellor  to  the 
export  department  which  is  seeking  the  right  channels  to  increase 
sales." 

Modern  Trends  in  Agency  Types. — Entirely  apart  from  the 
safe  bromides,  the  fact  remains  that  in  the  past  half-decade  there 
has  been  a  decided  change  in  the  nature  of  the  most  desired 
type  of  export  agents.  It  seems  only  yesterday  that  the  expert 
in  exporting  looked  askance  at  the  idea  of  granting  an  "exclu- 
sive"   without    a    large    stock    order    as   its  justification.     It 


HOW  rO  SELECT  AN  EXCLUSIVE  AGENT  ABROAD     333 

seems  only  yesterday  that,  a  wholesaler-  had  to  hold  a  virtual 
monopoly  of  his  field  in  order  to  merit  the  slightest  consideration 
as  a  potential  agent.  Then,  the  manufacturers'  agent  al)road  was 
in  many  markets  a  novelty,  and,  generally,  little  of  his 
present  worth  was  appreciated.  These  comments  apply 
to  products  which  do  not  demand  an  agency,  for,  of  course,  the 
very  nature  of  automobiles,  pianos,  typewriters  and  talking 
machines  has  always  indicated  or  demanded  agency  treatment. 
Nor  should  it  be  assumed  that  the  rise  of  the  manufacturers' 
agent  a])road  has  been  the  fall  of  the  stock-carrying  dealer  agent. 
Today,  in  almost  countless  lines,  the  dealer  agent,  because  of  his 
position  in  the  market,  because  of  his  relations  with  other  whole- 
salers, retailers  or  consumers  (as  the  line  may  demand),  is  a  selling 
force  far  superior  to  any  manufacturers'  agent — so  strong  a  force 
in  many  markets  as  to  bar  the  entrance  of  the  other  and  newer 
type.  But  the  contrast  between  1913  and  the  present  is,  indeed, 
remarkable.  The  tendency  towards  an  increased  use  of  the 
manufacturers'  agent  abroad  is  daily  seen  to  be  growing  stronger 
and  stronger  at  every  conference  of  the  elite  of  the  export  selling 
world. 

METHODS  USED  IN  SECURING  AGENTS 

What  is  the  best  way  to  secure  good  agents?  Methods  differ. 
Ask  one  veteran  who  makes  his  own.  He  catches  them  while  in 
the  United  States,  steeps  them  in  paints  and  varnishes,  and 
enthuses  them  with  his  products  and  their  profit-making  possibili- 
ties so  that  they  continue  to  live  paints  and  varnishes  long  after 
their  return  to  their  native  heaths. 

Another  authority  makes  a  practice  of  starting  a  separate 
selling  company  in  each  large  city.  Still  a  third  leading  light  in 
export  circles  will  tell  you  to  use  infinite  care,  get  suggestions  from 
everyone  and  then  pick  someone  no  one  else  would  think  of  twice, 
coach  him,  aid  him  to  the  nth  degree  in  cooperative  demand- 
creating,  and  then  give  service,  and  more  service. 

And  so  on  down  the  line.  Just  as  a  decade  or  more  ago  the 
export  world  had  to  doff  our  export  hats  to  a  novice  from  Syra- 
cuse for  his  simple  directness  in  starting  in  exporting  and  bringing 
to  exporting  many  good  things  it  had  previously  overlooked,  it 
again  can  doff  its  hat  to  another  newcomer  when  it  comes  to  the 
selection  of  the  "how  to  get  good  agents"  problem.     To  a  new- 


334  EXPORT  MERCHANDISING 

comer  in  exporting,  from  Holyoke,  Massachusetts —  a  man  when 
landed  twenty  prize  agenciesranging  in  type  from  retailer  to  manu- 
facturers' agent  abroad  in  three  short  months — we  must  all  pay 
our  humble  respects. 

The  "Holyoke  Method." — All  usual  methods,  however  sound, 
require  time  and  patience,  investigation  and  careful  checking 
But  the  Holyoke  method  is  equally  sound.  This  is  to  seek  out  a 
long-established,  closely  allied  but  non-competitive  line — one 
that  has  been  in  exporting  long  enough  to  have  made  its 
agency  mistakes  and  to  have  rectified  them — and  to  ''adopt" 
their  entire  agency  group  from  Iceland  to  Ceylon.  The  two 
merits  of  this  system  are  its  simplicity  and  its  safeness.  Many 
export  managers  had  the  germ  of  the  idea  before,  but  it  took  a 
novice  to  apply  modern  "mass  production"  and  "mass  selling" 
principles  to  agency  granting. 

The  best  way  to  secure  good  agents  abroad  is  through  brother 
exporters  who  have  summered  and  wintered,  coached  and  been 
coached  by  agents  who  have  withstood  every  test.  This  is 
particularly  true  in  the  case  of  manufacturers'  agents  abroad. 
For  the  one  absolute  essential  in  such  an  agent  is  his  selling 
ability.  The  best  advance  test  of  selling  al)ility  that  can  be 
asked,  is  a  five-or  ten-year  record  of  successful  selling  of  an  allied 
product  which  in  prices  compares  with  its  competitors,  much  as 
one's  own  product  compares  with  its  competitors. 

While  it  would  be  absurd  to  accept  haphazard  recommenda- 
tions, or  to  assume  that  even  in  allied  lines  no  precautions  should 
be  taken  in  the  cases  of  agents  successful  with  other  lines,  there 
is  an  element  of  certainty  in  approaching  the  proved  success  that 
even  the  most  complete  printed  report  inevitably  lacks.  But 
recommendations  should  be  a  start  rather  than  an  ending.  The 
wise  exporter  and  the  wise  foreign  credit  man,  while  accepting 
the  experience  of  the  other  man  as  valuable  evidence,  will  not 
accept  it  as  complete  evidence.  Through  questionings  and  credit 
reports  they  both  seek  the  conclusive  proof  of  desirability  which 
comes  only  from  the  data  secured  from  every  available  source  of 
information. 

Supplementary  Evidence. — The  need  of  this  supplementary 
evidence  is  easily  proved  by  the  experience  of  an  exporter  who 
deemed  it  unnecessary.  This  exporter,  deserved  his  fate,  for  he 
obtained  the  name  of  the  agent  in  a  Latin-American  city  by 
stealth.     Because  he  knew  of  the  thousands  of  dollars  which  his 


now  TO  .SELECT  AN  EXCLUSIVE  Ad  EST  AHROAl)     3:35 

rival  sold  the  agent  on  ninety-day  S/  D  attached  l\/h  terms,  he  was 
covetous.  He  was  also  secure,  he  felt,  because  he  knew  drafts 
were  met  promptly  and  invariably  at  maturity.  So  the  New 
Yorker  offei-ed  his  agency  for  his  several  non-competitive  lines, 
secured  an  initial  order  for  several  thousand  dollars,  ship[)ed  it. 
He  is  still  waiting  for  payment. 

What  the  New  Yorker  did  not  know,  and  will  not  know  unless 
he  reads  these  two  paragraphs,  are  the  peculiar  conditions  which 
envelop  the  agent's  relations  with  the  other  American  exporting 
manufacturer.  Years  ago,  when  the  New  York  corporation 
was  in  its  export  infancy,  the  other  maker  literally  saved  their 
present  agent — then  only  a  struggling  merchant — from  starvation 
he  not  only  extended  drafts,  but  actually  cabled  money  to  his 
family  during  his  illness.  He  never  forgot  the  kindness  of  men 
he  had  never  seen.  He  worked  for  them  without  commission 
until  they  detected  his  part  in  a  big  order  and  literally  forced 
him  to  accept  compensation.  He  has  always  paid  promptly 
every  charge  they  have  made  him.  But — such  is  human 
nature — since  his  illness  history  fails  to  record  a  payment  he 
has  made  anyone  else. 

Losses  from  Unwise  Agency  Decisions. — There  are  far  too 
many  exclusive  agency  arrangements  made  in  lines  and  in 
markets  which  do  not  justify  agency  treatment.  This  is  why  it 
was  safe  to  state  in  the  opening  sentence  that  the  exclusive 
export  agent  is  often  the  greatest  obstacle  to  the  greatest  export 
profits.  One  of  the  fundamentals  which  should  always  be  borne 
well  in  mind  is,  that  a  10  per  cent  commission  to  agents  is  not 
merely  a  10  per  cent  reduction  in  sales — it  is  a  far  greater  reduc- 
tion in  profits.  There  is  a  world  of  difference,  as  a  single  illustra- 
tion will  prove.  John  Jones  exports  a  machine  that  costs  him  $80 
f.o.b.  export  steamer,  New  York,  at  a  selling  price  of  $100,  His 
profit  is  $20 — 20  per  cent  profit.  But  the  moment  he  passes  a  10 
per  cent  commission  to  any  agent,  he  cuts  his  profit  down  50  per 
cent.  The  agent's  10  per  cent  is  on  the  $100  selhng  price  and  is, 
of  course,  $10 — exactly  half  of  the  maker's  entire  profit. 

In  line  after  line,  in  market  after  market,  will  be  found  losses 
of  legitimate  profits  because  unwise,  lightly  considered  agencies 
have  been  granted.  One  illustration  came  to  light  a  few  years 
ago  in  examining  the  sales  history  records  for  Brazil  of  a  long- 
established  exporter.  The  agent  in  Rio  actually  did  have  a 
force  of  salesmen  who  went  as  far  north  as  Para  and  as  far  south 


336  EXroiiT  MEliClIANDJSim^ 

as  Pelotas,  Porto  Alegre  and  Rio  Gran  du  Siil.  But  the  line 
was  one  which  should  have  been  marketed  through  every  reli- 
able trade  outlet,  and  the  agent's  salesmen  visited  only  the  sub- 
agents  of  the  agent — often  dealers  without  interest  in  this 
particular  Ameri(!an  product. 

Direct  Sales  as  an  Asset. — Fortunately,  the  American  manu- 
facturer's contract  permitted  direct  sales  to  others  than  the 
agent.  But  these  sales  could  be  made  only  at  prices  10  per  cent 
higher  than  the  agent's  prices,  and  all  such  direct  sales  were 
subject  to  a  10  per  cent  commission  to  the  agent.  Even  in  the 
face  of  this  price  difference,  the  American  manufacturer's 
export  advertising  had  built  up  a  steadily  increasing  direct  busi- 
ness, which  in  1916  was  of  such  size  that  (including  Manaos 
and  other  interior  cities  not  even  approached  by  the  agent) 
it  amounted  to  such  a  sum  that  the  agent's  10  per  cent  commis- 
sion on  this  direct  business  was  actually  greater  than  the  total 
of  his  own  stock  purchases.  In  other  words,  the  manufacturer 
actually  gave  his  agent,  without  charge,  all  the  goods  he  ordered, 
and  then  paid  him  for  taking  them. 

Analysis  of  Results. — What  had  the  American  manufacturer 
gained  from  this  agency  in  the  nine  years  it  had  then  been  in  force? 
First  of  all,  he  had  received  a  most  pleasing  initial  order  at  a 
time  when  his  sales  in  Brazil  were  negligible.  Then  he  had 
secured  quick  distribution  through  the  sub-agents  of  the  agent. 
Again,  he  had  the  opportunity  through  this  distribution  to  test 
the  relative  sales  value  in  Brazil  of  his  several  lines.  Against 
these  early  profits  must  be  charged  a  faulty  system  of  distribu- 
tion— one  which,  for  example,  cost  him  the  chance  to  grow  up  with 
San  Paulo — a  wonderful  market.  Then,  too,  must  be  charged 
against  the  early  profits  other,  if  smaller,  profits  which  would 
have  come  from  a  direct  and  country-wide  "all-by-mail"  sales 
campaign. 

But  against  these  credit  entries  there  must  be  placed  debit 
entries.  After  the  first  three  years  the  sales  of  the  Brazilian  agent 
and  his  sub-agents  remained  stationary.  But  the  direct  sales 
increased,  and  on  each  sale  the  American  exporter  paid  a  com- 
mission that  was  40  per  cent  of  his  profit.  In  city  after  city 
where  the  sub-agents  had  half-heartedly  offered  his  products, 
the  American  maker  had  the  difficult  task  of  creating  new 
interest — which  increased  his  sales  expense  and  slowed  up 
his  sales  development.     Further  than  this,  he  was  not  free  to 


HOW  TO  SELECT  AN  EXCLUSIVE  AGENT  ABROAD     337 

appoint  good  local  agents  in  territory  where  agency  treatment 
would  have  been  thoroughly  desirable.  Undoubtedly  the 
initial  advantages  of  the  agency  have  cost  over  $150,000  in 
profits  in  the  past  six  years  alone. 

The  Law  of  Compensation  in  Concessions. — One  of  the  funda- 
mentals of  agency  granting  comes  with  the  recognition  of  the 
business  axiom  that  a  concession  granted  should  be  balanced  by 
a  concession  received.  Each  exporter,  before  in  any  way  tying 
his  own  hands  by  an  agency  arrangement  and  before  dividing  on 
a  liberal  scale  his  future  profits  on  direct  sales  in  the  agent's 
assigned  territory,  should  examine  carefully  into  the  concessions 
which  he  is  to  receive.  In  many  cases  the  worth  of  the  repre- 
sentation is  ample  repayment.  In  many  others  the  guaranteed 
purchases  or  sales  covered  by  the  contract  is  ample  repayment. 
In  still  other  cases  the  broad  ground-work;  the  background  for 
intensive  sales  campaigns;  the  introductions  through  the  agent 
to  good  trade  outlets,  are  well  worth  all  concessions  granted. 
But  these  factors  must  not  be  assumed  to  be  in  existence.  Their 
presence  should  be  a  matter  of  advance  proof  and  not  of  mere 
surmise. 

It  is  not  at  all  fair  to  consider  any  words  in  this  discussion 
of  agencies  to  be  adverse  criticism  of  the  exclusive  export  agent 
himself.  History  shows  us  too  many  examples  wherein  the  agent 
has  proved  himself  the  better  business  man.  If  the  merchant 
in  Bahia  dreams  of  capability  to  handle  a  maker's  products  in  all 
Brazil,  and  the  exporting  manufacturer  accepts,  without  inves- 
tigating this  dream  as  a  fact,  surely  the  blame  is  not  to  be  placed 
on  the  Bahia  agent.  The  fact  is,  that  the  average  American 
enterprise  is  hard-headed  at  home  and  over  liberal  in  foreign 
fields.  Corporations  that  would  resent  a  domestic  salesman's 
suggestion  of  a  slightly  larger  territory  than  his  usual  cities  and 
towns,  will  grant  a  wholesaler  in  Lima  the  agency  for  all  Peru, 
when  a  single  question  would  show  him  incapable  of  securing 
distribution  beyond  Lima  and   Callao. 

COOPERATION  WITH  THE  EXPORT  AGENT 

But  if  the  average  exporter  is  over-generous  in  granting 
agencies,  he  is  certainly  parsimonious  in  his  cooperation  with 
his  agents.  This  does  not  refer  alone  to  money  matters.  For 
the  average  exporter  is  far  more  stiney  with  his  brains  than 

22 


338  EXPORT  MEHCIIANDJJSING 

with  his  pocket  book.  After  all,  no  matter  what  the  type  of 
agent  may  be,  he  is  a  salesman  of  the  manufacturer's  products 
and  entitled  to  exactly  the  same  type  of  cooperation.  It  may 
be  that  there  is  truth  behind  the  theory  that  insists  that  the  right 
way  to  teach  a  boy  to  swim  is  by  throwing  him  into  deep  water. 
Based  on  observation  of  agencies  who  were  taught  in  this  manner 
to  sell  American  goods,  there  is  certainly  an  abnormal  per  cent  of 
failures. 

The  Co-partnership  Ideal. — One  of  the  fundamentals  of  agency 
cooperation — that  of  thoroughly  acquainting  the  agent  with 
every  product  of  the  manufacturer — is  easy  to  forget.  Not  only 
must  the  agent  know  the  whys  and  wherefores  of  each  article, 
but  also,  he  must  know  the  entire  set  of  dealer  and  consumer 
arguments  which  go  with  each  article.  And  these  selling 
points  must  be  given  careful  consideration.  Frequently  in 
foreign  fields  it  is  necessary  to  delve  back  into  history  and  to  find 
out  the  original  arguments  used  in  domestic  selling.  This  is 
particularly  true  when  attachments  or  conveniences  are  involved. 
It  is  doubly  true  when  domestic  arguments  are  aimed  to  offset 
domestic  competition  which  is  absent  in  foreign  fields.  The 
agent  deserves  not  only  cooperation,  but  also  m/eZZzgfen^  cooperation. 

Cooperation  with  agents  should  begin  and  not  end  with 
the  steps  which  familiarize  the  agent  with  the  maker's  products 
and  selling  arguments.  The  breath  of  selling  life  should  be  put 
into  the  entire  relation  by  consistent,  cooperative  selling  efTorts. 
Goals  should  be  determined,  and  determined  efforts  made  to 
reach  these  goals.  The  lackadaisical  spirit  which  says,  "There 
you  are.  Now  let's  see  how  far  you  can  go."  is  markedly  inferior 
to  the  forceful  spirit  that  says,  "Here  we  are.  There's  where 
we've  got  to  go  to  get  maximum  results.  Let's  get  there!" 
For,  after  all,  any  but  carefully  rehearsed  selling  efforts  between 
distant  co-partners  in  effort  are  like  the  struggles  of  the  untrained 
pair  in  a  three-legged  race.  Unless  effort  is  co-ordinated  and 
synchronized  to  a  high  degree  the  result  is  wasted  energy,  a  bad 
fall  and  a  race  lost. 

Profits  from  Cooperation. — Amazing  results  often  follow  intelli- 
gent cooperation  with  agents,  even  in  the  face  of  long-established 
competition.  In  many  markets  articles  which  are  the  existing 
standard  enjoy  popular  favor  without,  however,  more  than 
the  slightest  powers  of  resistance.  They  hold  markets  because 
of  the  absence  of  intelligent  competition,  rather  than  because 


HOW  TO  SELECT  AN  EXCLUSIVE  AGENT  ABROAD     339 

those  who  buy  tuul  who  usu  thciii  have  been  "sold"  on  their 
desirabihty .  Only  last  year  a  line  of  toilet  preparations  which  for 
at  least  five  years  had  enjoyed  95  per  cent  of  the  importations  in 
a  Latin-American  republic,  lost  over  90  per  cent  of  its  business  to 
another  American  maker  who  cooperated  with  his  agent  in  a 
sales  campaign  that  reached  into  almost  every  home  and  which 
engaged  the  interest  of  every  trade  outlet  for  toilet  preparations. 
The  new-comer  in  a  single  year  has  not  only  achieved  a  sales 
volume  nearly  equal  to  its  rival's  five-year  high-water  mark,  but 
also  the  new-comer  has  rendered  his  own  displacement  in  favor 
(and  in  sales)  impossible  at  any  reasonable  sales  expense. 

Cooperation  is  Mutual  Effort. — The  fundamental  in  coopera- 
tion with  agents  is  to  be  sure  that  it  is  cooperation  and  not  dona- 
tion. IVIany  exporters  confuse  the  two,  both  in  theory  and 
practice.  The  bulk  of  "allowances  for  local  advertising"  are 
out-and-out  donations.  Real  cooperation  insists  that  there  be  a 
real  and  not  a  theoretical  working  together  to  accomplish  a  definite 
task.  Many  a  good  export  selling  campaign  has  been  made  into 
a  better  one  by  the  intelligent  suggestions  of  the  agent.  Many 
a  poor  export  selling  campaign  has  brought  back  profits  instead 
of  losses,  simply  and  solely  because  the  agent's  energy  and 
ability,  acquaintance  with  his  market  and  loyalty  of  his  clientele, 
were  forces  too  strong  for  even  a  half-baked  export  campaign  to 
defeat. 

Loyalty  on  the  part  of  an  agent  presupposes  a  correct  object 
for  loyalty.  The  idol  with  feet  of  clay  will  soon  discover  his  own 
weakness — for  the  agent  will  point  out  the  weakness.  The 
export  executive  who  feels  secure  because  he  has  his  agent's 
signature  on  a  contract  stipulating  definite  yearly  sales  totals, 
is  miscast  as  a  director  of  sales.  He  should  have  been  a  slave- 
driver.  For  cooperation  does  not,  never  did  and  never  will 
consist  of  whip-cracking  of  contract  clauses  over  the  back  of  any 
agent.  The  higher  the  amounts  called  for  in  an  export  exclusive 
agreement;  the  more  difficult  these  are  seen  to  be  to  achieve,  the 
greater  is  the  obligation  of  the  exporter  to  cooperate  in  making 
certain  that  totals  will  be  met  without  undue  effort  or  unfair 
expenditure  by  the  agent.  The  sales  figures  represent  a  mutual 
estimate  of  a  fair  amount  of  guaranteed  sales.  In  any  ordinary 
case  the  maker  as  well  as  the  agent  should  be  held  to  be  respon- 
sible for  the  totals  being  reached.  There  must  be  cooperation  of 
brain  and  investment  as  well  as  of  heart  and  hopes. 


340  EXPORT  MERCHANDISING 

The  Agent's  Viewpoint. — On  this  point  it  is  well  to  quote  from 
a  letter  now  nearly  eleven  years  old,  but  always  fresh  in 
memory  and  always  of  up-to-date  value  because  it  is  based  on 
fundamentals  and  not  on  frills.  It  is  from  a  man  who  has 
perhaps  earned  as  high  respect  by  American  exporters  as  any 
agent  in  the  Far  East. 

"I  have  several  times  been  asked,"  his  letter  reads,  "why  I  repre- 
sent three  products  which  are  by  no  means  leaders  in  public  esteem  in 
the  United  States.  My  answer  is  a  simple  one.  It  is  because  I  find 
greater  i^rofit  and  greater  pleasure  in  representing  them  than  I  ever 
did  when  I  had  the  unquestioned  leaders  under  my  agency  wing.  It 
is  one  of  the  inexplicable  facts  that  some  of  the  largest  American  manu- 
facturers have  no  high  official  with  an  honest  interest  in  their  export 
trade.  Foreign  merchants  with  capital  of  millions  and  international 
reputation  are  at  the  mercy  of  an  over-titled  office  boy." 

"I  rebelled,"  he  continues,  "and  made  it  clear  that  I  would  resign 
unless  they  cared  for  profits  enough  to  keep  me  in  contact  with  some- 
one who  had  a  voice  in  the  policy  of  the  company  I  represented.  I 
resigned,  because  I  could  not  get  such  a  promise.  My  present  con- 
nections want  export  profits.  Their  presidents,  general  managers, 
boards  of  directors,  all  want  foreign  profits.  They  will  spend  an  hour 
in  conference  on  any  serious  point  I  raise.  They  will  and  do  delegate 
some  high  official  to  work  over  plans  for  increased  sales,  that  I  submit. 
One  of  the  three  firms,  whose  presence  on  my  list  aroused  your  curiosity, 
sent  their  advertising  manager  on  a  30,000-mile  trip  to  aid  me.  But 
you  are  wrong  on  one  point.  You  use  the  words  'little-known'  to 
describe  another  of  the  firms  on  my  letterhead.  There  is  a  saying 
'handsome  is  as  handsome  does,'  and  this  'little-known'  firm  is  by  all 
means  the  best  known  in  the  Far  East  in  its  lines. " 

Where  the  Small  Manufacturer  Can  Shine. — "You  may  be  aston- 
ished," he  elaborates,  "to  know  that  this  'little-known'  firm  completely 

overshadows and  also ,  who  are  such  easy 

leaders  in  their  home  markets.  They  would  be  found  as  without  repu- 
tation here.  I  know,  because  what  reputation  they  have  I  established 
before  I  gave  them  up  as  hopeless.  This  newer,  smaller  and  less  known 
firm  looms  up  as  a  world-beater  here  through  the  ceaseless  efforts,  both 
on  my  part  and  theirs,  to  dominate  this  market.  They  have  sampled, 
they  have  used  outdoor,  indoor,  street  car  and  local  newspaper  adver- 
tising. They  use  liberal  space  in  the  leading  export  journals  published 
in  the  United  States  which  reach  here.  They  even  contribute  modestly 
to  local  charities.  Their  president  knows  the  birthdays  of  the  heads  of 
local  businesses  and  writes  congratulatory  letters.  This  company 
subscribes  to  every  local  paper  in  the  Far  East  (not  so  many  as  it  sounds) 
and  has  a  correspondent  who  writes  a  steady  stream  of  letters  to  large 


HOW  TO  SELECT  AN  EXCLUSIVE  AGENT  ABROAD     341 

consumers  as  well  as  to  dealers.     Why  do  they  do  all  these  things,  in 

which  I  could  arouse  no  interest  with or ? 

Because  they  want  the  profits,  need  them  and  are  willing  to  be  hard 
workers  and  good  mixers  to  earn  them;  because  they  work  with  me, 
not  depend  iipon  me.     There's  a  big  difference." 

How  many  manufacturers  insist  that  their  export  salesmen 
allow  time  enough  to  get  out  and  work  with  and  for  their  export 
agents?  The  tendency  is  to  travel  too  fast.  The  tendency  is  to 
get  the  agent's  order,  go  with  him  to  meet  a  few  large  accounts 
and  then  move  on.  Cooperation  is  not  such  a  simple  child.  The 
better  export  salesmen  are  not  above  meeting  the  smaller  trade. 
Good  salesman  are  all  anxious  rather  than  the  reverse  to 
learn  at  first-hand  from  consumers  the  real  needs  of  every  market, 
incidentally  selling  the  very  consumers  they  interview,  and 
turning  these  consumer  orders  over  to  some  dealer  who  will 
appreciate  them. 

Creating  Consumer  Demand. — One  New  England  exporter  is 
particularly  keen  on  this  consumer  "  missionary  "  work.  In  addi- 
tion to  including  time  for  it  in  the  trips  of  even  his  veteran  sales- 
men, he  has  special  missionary  men  who  sell  consumers  for  the 
account  of  the  trade,  and  who  sell  the  smaller  trade  for  the  whole- 
saler. But  he  insists  that  the  agent  do  hkewise,  and  while  the 
missionary  salesman  makes  first  calls  and  distributes  samples, 
it  is  the  agent  who  must  provide  someone  to  follow  through  and 
make  the  salesman's  visit  fully  effective.  This  New  Englander 
also  supplements  the  work  of  one  of  his  very  good  salesmen  (who 
has  the  one  fault  of  being  unable  to  sell  one  staple  line  out  of  his 
eighteen)  with  a  missionary  man.  This  helper  starts  out  several 
months  in  advance  of  the  senior  salesman  and  specializes  on  the 
staple  line  mentioned.  He  leaves  his  consumer  and  small  trade 
orders  in  reach  for  the  senior  salesman  to  use  in  getting  stock 
orders  from  retailers  and  wholesalers  through  his  agent. 

This  is,  of  course,  an  expensive  way  to  get  business,  but  the 
missionary  man  covers  a  different  portion  of  the  world's  surface 
each  year.  He  is  used  to  round  out  development  of  their  sales 
variety.  He,  in  one  trip,  creates  actual  consumer  and  dealer 
demand  which  any  salesman  can  maintain  and  most  salesmen 
can  develop,  particularly  as  the  missionary  man's  visit  places 
the  agent  under  real  obligations  and  enforced  cooperation. 

Study  as  the  Hope  of  the  Future. — There  is  a  woild  of  study 
that  can  still  be  given  the  prohlem  of  the  agent  and  the  problems 


342  EXPORT  MERClfANDISING 

of  the  agent.  Exporters  need  to  know  more  definitely  when  to 
use  agents.  Exporters  need  to  know  more  clearly  how  they  can 
cooperate  with  agents.  But  in  the  meantime  there  is  little  excuse 
for  mistakes  due  to  carelessness  and  indifference.  There  is  no 
excuse  for  failure  to  consider  the  agent  as  an  integral  part  of  the 
selling  machinery — a  part  that  costs  money — a  part  that  deserves 
and  demands  constant  attention  and  adequate  lubrication. 


CHAPTER  XXX 
THE  EXPORT  EXCLUSIVE  AGENCY  CONTRACT 

"Tlic   most  valuable  ally   and   the  most  powerful  enemy  of  the 
American  exporter  is  the  exclusive  agent." — H.'  M.  Maxwell. 

Function  of  Agency  Contract.  Importance  oj  Exact  Definitions  in  Foreign 
Trade.  Contracts  Must  Be  Equitable.  Exam-pies  of  Unfair  Contracts. 
Rights  that  Must  Be  Respected.  Careful  Wordings  Essential.  The  Agency 
Contract  as  a  Sales  Document.  Fifty  Factors  to  he  Considered  in  an  Agency 
Contract. 

The  fundamental  purpose  of  a  written  agency  contract  is  to 
increase  sales  by  so  clearly  defining  mutual  obligations  that 
misunderstandings  are  impossible.  Its  chief  function  is  not 
to  enable  the  grantor  to  win  law  suits.  An  exclusive  agency 
contract  is  merely  the  record  of  equitable  duties  and  of  the 
conditions  under  which  these  duties  are  to  be  discharged.  It  is 
an  agreement  between  gentlemen  whose  interests  are  common 
and  whose  pleasure  it  is  to  associate  themselves  for  profit. 

The  Strength  of  the  Contract. — No  contract  is  stronger  than 
the  intentions  of  the  contracting  parties.  Those  who  have  in 
centuries  past  and  those  who  may  for  centuries  to  come  hold  a 
contrary  belief,  need  no  sympathy.  The  man  who  prides  him- 
self on  his  ability  to  beat  the  dishonest  had  best  engage  his  abili- 
ties at  a  salary  on  the  police  force.  Such  a  man  is  a  costly 
luxury  to  the  enterprise  engaged  in  export  selling. 

Equity  the  Dominant  Factor. — The  export  contract  must  be 
an  equitable  contract.  If  it  demands  more  than  it  gives,  then 
it  creates,  sooner  or  later,  the  resentment  which  is  not  com- 
patible with  greatest  profits.  If  it  gives  more  than  it  demands, 
then  it  weakens  itself  by  its  record  of  weakness.  The  man  or  the 
enterprise  enjoying  the  signing  of  contracts  manifestly  unfair  to 
the  agents  forgets  that  an  agent's  signature  to  such  a  contract 
is  proof  that  the  agent  has  been  unwisely  selected.  For  if  an 
agent  will  placidly  submit  to  such  an  imposition,  it  is  fair  to 
assume  that  the  agent's  future  is  imperilled  by  tliis  business 
weakness. 

34;} 


344  EXl'OUr  MERCHANDISING 

False  Security  in  Inequitable  Agreements. — The  usual  export 
contract  is  inequitable  on  its  very  face.  The  exporter  in  his 
preamble  grants  the  exclusive  agency  for  his  products  in  stated 
territory  to  the  agent.  Then  for  ten  to  fifty  articles  or 
divisions  he  arrogates  to  himself  the  right  to  be  sole  judge  of 
every  function  of  the  agency  relation.  As  equity  in  every  form  of 
human  relations  is  the  strongest  force  in  the  world  today,  it 
need  only  be  said  that  the  inequitable  contract  is  a  boomerang. 
Whether  the  final  contest  of  the  inequitable  contract  be  in  the 
agent's  mind  or  in  the  Court  of  Last  Appeal,  its  framcr  must 
be  the  loser. 

Study  Needed  to  Protect  Rights. — The  export  exclusive  con- 
tract should,  first  of  all,  respect  and  include  the  rights  of  both 
signatory  parties.  It  must  not  be  a  one-sided  agreement,  even 
though  its  provisions,  so  far  as  they  are  included,  are  entirely 
free  from  unfairness.  It  must  be  written,  if  it  is  to  be  wisely 
drawn,  only  after  the  interests  of  both  exporter  and  importer 
have  been  carefully  studied.  It  must  be  written  from  the  view- 
point which  sees  both  buyer  and  seller  as  equal  partners. 

Clearly  Drawn  Contracts  Essential.^ — The  form  of  the  exclusive 
contract  is  important.  It  must  be  clearly  drawn.  It  must 
define  unmistakably  every  phase  which  it  touches.  Vague 
provisions  such  as  "Sixty  day  draft"  or  "Two  per  cent  discount 
for  cash  payment"  should  never  be  permitted.  The  territory 
should  be  described  so  that  if  question  arises  the  agreement  will, 
by  its  explicit  provision,  answer  the  question.  The  man  who 
draws  up  a  contract  and,  while  intending  to  limit  agency  repre- 
sentation to  England,  Scotland  and  Ireland,  uses  the  words 
"Great  Britain,"  paves  the  way  to  the  inevitable  controversy. 
Nor  is  it  wise  to  leave  it  to  the  court  to  decide  on  the  meaning 
of  "Guatemala,"  when  the  use  of  the  words  "City  of  Guate- 
mala" would  make  recourse  to  courts  unnecessary. 

THE  EXPORT  EXCLUSIVE  AGENCY  CONTRACT  AS  A  SALES  POWER 

The  agency  contract  should  be  a  sales  document.  It  should 
be  free  from  legal  phraseology  except  when  legal  terms  are 
needed  clearly  to  define  a  point.  It  should  inspire  confidence 
by  its  straightforward  wording,  and  earn  respect  by  its  complete- 
ness and  obvious  fairness. 

Posthumous  Rights  of  Agent. — Whenever,  in  equity,  an 
agent  is  entitled  to  recognition  after  the  termination  of  the  contract, 


THE  EXPORT  EXCLUSIVE  AGENCY  CONTRACT         345 

this  legitimate  interest  should  be  included  specificully  in  the 
contract  and  the  exact  form  of  payment  made  clear  beyond 
doubt.  This  is  not  a  dangerous  clause.  It  is  an  asset  and  not  an 
unwise  contingent  liability.  The  prospective  agent  as  he  reads 
such  a  clause  before  decision  as  to  his  acceptance  of  the  agency, 
will  see  in  it  something  which  will  end  many  of  his  misgivings. 
He  will  credit  the  exporter  with  both  fairness  and  foresight. 
He  will  appreciate  this  tangible  evidence  of  understanding  and 
recognition  of  his  right. 

DRAFTING  THE  EXPORT  EXCLUSIVE  AGENCY  CONTRACT 

Each  contract  should  have  a  foundation  so  carefully  considered 
that  the  omission  of  any  important  factor  is  impossible.  Based 
on  an  examination  of  several  scores  of  export  exclusive  agency 
contracts  (few  of  which  were  either  complete  or  equitable) 
these  factors  should  be  included : 

1.  Agent's  official  name  and  address 

2.  Seller's  official  name  and  address 

3.  Nature  of  relation  and  mutual  obligations 

4.  (a)  Territory 
(6)  Products 

5.  Reserved  rights  of  seller  in  described  territory,  such  as  governmental 
business,  added  products  and  direct  sales  to  other  than  agents. 

6.  Term  of  contract 

7.  Method  and  time  of  compensation  of  agent 

8.  Protection  of  agent  and  compensation  on  direct  or  indirect  sales  in  his 
territory. 

9.  Prices: 

(a)  Discounts,  including  cash  discounts 

(b)  Catalogs  and  price  lists  to  which  discounts  apply 

(c)  Price  changes  during  life  of  contract 

(d)  Special  charges  for  packing  and  casing 

(e)  F.o.b.  point 

10.  Terms  of  sale 

11.  Conditions  surrounding  sales  by  agent  for  account  of  seller 

12.  Provisions  covering  l)ankrui)tcy,  reorganization  or  transfer  of  or  b.y 
either  seller  or  agent. 

13.  Prices  at  which  agent  shall  sell 

14.  Granting  or  withholding  right  of  agent  to  sell  outside  his  own  lerritorj' 

15.  Right  of  agent  to  sell  or  act  as  agent  for  competing  products 

16.  Allowances  for  advertising,  samples  and  selling  expense 

17.  Required  purchases  or  sales  in  each  year  of  agency  relation 

18.  Definition  of  such  purchases  or  sales  and  of  required  relation  (if  any) 
between  purchases  by  agent  in  comparison  with  sales  to  others. 


34()  EXPORT  MERCHANDISING 

19.  Provisions  rclatiiif?  to  tlic  jiossihlc!  riiiluic  of  af^eiit  to  rcacli  purchase 
or  sales  totals. 

20.  Stateineiit  of  the  lijilit  of  scHcr  lo  pass  on  and  to  limit  credits  on 
purchases  and  sales. 

21.  Cancellation  clauses 

22.  Rights  and  privileges  of  seller  and  agent  at  expiration  of  contract  or 
at  termination  of  contract  equitably  protected. 

23.  Repairs,  damages  and  claims  defined  and  policy  and  practice  por- 
trayed. 

24.  Provision  for  disposition  of  stock  at  endhig  of  contract 

25.  Conditions  under  which  either  party  may  assign  contract  to  another. 

FURTHER  QUALIFYING  CLAUSES 

In  addition  to  this  rather  formidable  Hst  there  are  necessarily 
included  in  some  export  exclusive  agenc}^  contracts  clauses  to 
cover: 

1.  Establishment  of  service  depots 

2.  Employment  by  agent  of  technical  staff 

3.  Maintenance  of  display  rooms,  warehouses,  sales  offices 

4.  Carrying  of  parts  or  attachments 

5.  Allowances  for  competitive  products  "traded  in"  or  taken  in  part 
payment  by  agent. 

6.  Value  of  stock  to  be  carried  by  agent 

7.  Sales  assistance  to  be  rendered  by  seller's  representatives  or  otherwise 

8.  Penalty  clauses  other  than  those  relating  to  forfeiture  of  contract 

9.  Arbitration  of  disputes  by  named  third  party  or  parties 

10.  Authority  of  agent  to  act  for  seller 

11.  Ownership  of  trade-marks,  copyrights  and  patents 

12.  Changes  in  customs  tariffs 

13.  Changes  in  ocean  or  inland  freight  rates 

14.  Changes  in  marine  and  war  risk  insurance  rates 

15.  Reports  by  agents  of  his  sales  in  detail  and  of  visits  to  prospective 
buyers  and  information  obtained  thereby. 

16.  Cost  of  cables,  correspondence  and  office  expenses 

17.  Compensation  of  agent  for  mere  acceptance  of  ageny  contract 

18.  Local  or  temporary  purchases  from  other  sources  of  supply  by  agent 
in  event  of  seller  being  unable  to  supply  his  products. 

19.  Defrayment  of  agent's  expenses  on  trips  to  seller  and  frequency  of 
such  trips. 

20.  Insurance  on  stock  carried  by  agent 

21.  Financial  arrangements  to  i)rotect  seller  in  cases  where  consignment 
stock  is  carried. 

22.  Guaranteeing  of  payment  by  third  party  ii:  event  of  agent's  failure 
to  pay  in  accordance  with  contract  or  deposit  of  funds  in  escrow. 

23.  Right  of  agent  to  appoint  sub-agent  and  conditions  under  which  such 
sub-agencies  shall  operate. 


THE  EXPORT  EXCLUSIVE  AGENCY  CONTRACT         347 

24.  Division  of  excess  profits  when  sales  arc  made  either  by  agent  or 
seller  at  prices  higher  than  mentioned  in  main  clauses  of  contract. 

25.  Payment  of  taxes,  cost  of  complying  with  legislative  enactments  either 
in  country  of  seller  or  of  agent. 

26.  Terms  as  well  as  prices  subject  to  change  after  due  notice 

27.  Agent  to  be  responsible  for  credit  of  customers. 

These  additional  clauses  by  no  means  cover  the  range  of  condi- 
tions, actual  and  possible,  which  are  included  in  exclusive  export 
agency  contracts.  The  fifty-odd  points  included  in  the  two 
groups  must  be  regarded  as  suggestive  rather  than  exhaustive. 
Each  one  given  is  worthy  of  an  export  executive's  best  thought 
in  its  application  or  lack  of  application  to  his  own  enterprise. 

Non-essential  Clauses  Unwise. — It  by  no  means  follows  that 
an  agency  agreement  should  be  rendered  cumbersome  by  vision- 
ary clauses.  Careful  selection  of  the  agent  will  make  both 
unneeded  and  unwise  any  contract  that  includes  more  than  the 
"certainties"  in  relations  and  a  selected  few  of  the  "strong 
probabilities." 

Five  Important  Factors. — In  the  study  of  the  problems  which 
are  inherent  in  the  consideration  of  the  export  agency  and  the 
export  agency  contract  these  five  points  can  well  be  borne  in 
mind : 

1.  Decision  should  be  based,  on  the  granting  of  any  agency,  on  the  needs 
of  the  future  as  well  as  of  the  i)rcsent. 

2.  The  choice  of  an  agent  should  not  be  made  in  haste  or  without  adequate 
investigations. 

3.  The  credit  man's  training  and  abilities  should  be  employed  before  any 
contract  is  prepared. 

4.  The  square  deal — the  equitable  contract — is  the  only  contract  anj- 
exporter  can  afford  to  offer. 

5.  Each  contract  should  be  a  monument  to  the  maker's  knowledge  of  the 
best  practices  in  exporting. 

Those  who  will  test  each  contract  by  these  five  points  and 
will  act  upon  the  concentrated  and  expensively  acquired  wisdom 
they  contain  will  do  much,  not  onl}-  for  themselves  but  also  for 
the  good  name  of  the  United  States  in  foreign  trade. 


CHAPTER  XXXI 

SHOULD  THE  EXPORT  MANAGER  PASS  ON  FOR- 
EIGN CREDITS? 

"There  can  be  no  question  as  to  the  abihty  of  the  export  executive 
to  become  capable  of  passing  upon  foreign  credit  risks.  It  is  the 
advisability — not  the  ability — that  is  to  be  questioned." 

— Harry  W.  Hanson. 

The  Export  Manager's  Knowledge  of  Actual  and  Prospective  Customers. 
His  Ability  to  Become  a  Grantor  of  Foreign  Credits.  His  Direct  Interest  on 
Net  Profits.  Possible  Economy  in  Export  Manager's  Control  of  Credit  Func- 
tion. Are  "Foreign  Credits"  more  "Foreign"  than  "Credits?"  Exatnples 
Proving  Assumption  of  Credit  Duties  Rob  Export  Manager  of  Time  Needed  for 
Organizing  and  Selling.  Capitalizing  the  Greater  Experience  of  the  Credit 
Manager.     Wisdom  of  Divorcing  Credit  and  Sales  Functions. 

Should  the  export  manager  pass  upon  foreign  credits?  Long- 
estabhshed  and  diverse  practice  has  resulted  in  opinions  based 
upon  a  precedent  rather  than  upon  a  sound  analysis  of  the  vital 
factors  involved  in  the  crediting  of  foreign  orders.  The  under- 
lying principles  can  best  be  determined  by  a  review  of  the  expres- 
sions of  men  whose  life  work  has  been  largely  or  entirely  in  the 
opening  and  maintenance  of  business  relations  with  importers 
abroad. 

Export  Manager  Knows  Customers. — First  can  be  listed  the 
views  of  those  who  favor  the  export  manager  as  the  logical  one  to 
pass  upon  foreign  credits.  The  outstanding  argument  expressed 
and  implied  is  based  upon  the  unquestioned  truth  that  the  export 
man  is  more  famihar  than  the  credit  man  with  importers  abroad 
before  they  order  and  thus  become  subject  to  credit  decision. 
It  is  emphasized  that  the  good  export  manager  from  the  very 
start  seeks  to  know  each  prospective  customer  in  order  that  the 
sales  efforts  may  be  individual  and  compelling. 

The  second  major  argument  is  that  the  export  manager  is 
entirely  capable  of  passing  on  foreign  credits.  Evidence  is 
advanced  to  show  his  power  in  initiative,  his  necessarily  well- 
balanced  judgment  and  his  wide  opportunity  to  know  human 
nature.  Stress  is  placed  upon  the  truth  that  by  necessity  the 
export  manager  knows  foreign  draft  usage,  foreign  banking,  with 

348 


PASSING  ON  FOREIGN  CREDITS  349 

particular  reference  to  discounting  and  the  usual  terms  extended 
abroad  by  competitors  both  foreign  and  domestic.  Thus  is  the 
export  manager  proved  capa!)le  of  handling  foreign  credits, 
particularly  (as  one  able  executive  points  out)  when  on  the 
technical  side  he  can  use  the  domestic  credit  man  as  an  advisor. 

Balancing  Sales  and  Credits. — The  third  major  argument 
states  that  the  export  manager  has  a  dollar  and  cent, 
day  in  and  day  out  set  of  reasons  for  making  the  sales  of 
his  department  profitable.  Therefore,  if  he  is  entrusted  with 
the  crediting  of  foreign  orders,  he  will  carefully  avoid  losses  that 
would  decrease  the  profit  side  of  his  department  ledger,  both  by 
care  in  credits  and  by  refraining  from  the  solicitation  of  doubtful 
risks.  Between  the  lines  of  the  testimony  of  several  witnesses 
is  the  thought  that  the  export  manager  should  handle  foreign 
credits  as  a  balance  weight  against  too  promiscuous  selling 
efforts. 

The  fourth  major  argument  for  the  export  manager's  con- 
trol of  credits,  is  that  of  economy.  A  wide  difference  be- 
tween domestic  and  export  selling  is  pointed  out  in  the  fact 
that  before  an  order  is  finally  received  from  an  importer 
the  export  manager  has  secured  through  various  channels  a 
wealth  of  information  in  regard  to  the  prospective  customer. 
This  information,  secured  primarily  for  sales  purposes,  is  usuall}^ 
adequate  for  the  credit  decision  when  the  initial  order  is  once 
received.  Thus  several  quite  naturally  emphasize  the  lost  time 
and  waste  motion  in  turning  over  to  another  all  the  phj^sical  and 
mental  data  accumulated  in  the  process  of  selling,  particularly 
as  it  is  estimated  that  in  more  than  three-quarters  of  all  cases  a 
favorable  verdict  is  certain. 

"Foreign"  or  "Credits?" — The  fifth  major  argument  is  that 
"foreign  credits"  are  far  more  "foreign"  than  "credits."  The 
advocates  of  this  view  base  their  claim  on  the  truths  that  while 
domestic  business  is  usually  conducted  on  open  account,  export 
business  is  usually  on  a  time  documentary  draft  basis;  that  the 
practice  peculiar  to  exporting,  of  discounting  documentary 
drafts,  is  a  further  proof;  that  export  terms  differ  widely  from 
domestic  terms;  that  foreign  credits  are  based  on  assembled 
information  rather  than  on  symbols  in  a  rating  book,  and  that 
export  collections  (the  twin  sister  of  foreign  credits)  are  an 
entirely  different  type  from  domestic  collections.  With  these 
facts  made  prominent,  they  point  out  that  the  export  manager 


350  EXl'Oirr  MKRCIIANDIHlNd 

must  constantly  Ije  in  touch  with  the  export  practices  which  are 
entirely  out  of  the  daily  routine  of  the  domestic  credit  manager. 

Entirely  different  in  nature  is  a  forcible  argument  which,  it  is 
rightly  claimed,  has  wide  application.  It  is  a  true  premise  that 
many  manufacturers  have  an  almost  non-existent  domestic 
credit  department.  It  is  argued  that  with  the  advent  of  foreign 
credit  problems  it  is  wise  to  leave  the  solution  of  these  to  the 
export  manager,  rather  than  to  create  an  office  unneeded  for 
domestic  business  and  which  would  be  needed  only  for  a  few 
hours  a  month  for  export  business.  Many  American  manufac- 
turers dispose  of  their  output  to  one  hundred  or  less  domestic 
outlets,  all  of  whom  are  known  personally  to  one  or  more  of  the 
officers  of  the  corporation  who  know  intimately  the  business 
affairs  of  these  customers.  Hundreds  of  other  American  manu- 
facturers produce  articles  the  sale  of  which  by  an  individual 
retailer  is  so  small  a  fraction  of  his  total  sales  that  credits,  in  all 
but  exceptional  cases,  are  little  more  than  the  clerical  task  of 
looking  up  the  mercantile  agency  ratings.  The  few  exceptions 
are  handled  by  some  officer  of  the  company  based  upon  mercan- 
tile agency  special  reports. 

The  Credit  Man  Who  Is  Afraid.^ — Strangely  enough,  those  who 
believe  that  the  export  manager  is  the  one  to  pass  on  foreign 
credits,  pass  lightly  by  a  situation  once  all  too  commonly  met. 
The  export  trade  of  the  United  States  up  to  a  few  years  ago,  and 
to  a  less  extent  today,  has  been  and  is  handicapped  by  the 
existence  of  credit  men  with  neither  a  liking  for  nor  a  knowledge 
of  export  trade.  These  men,  who  enjoy  the  confidence  of  the 
management  of  their  enterprises  stand  between  the  export  man 
and  the  development  of  his  foreign  sales.  They  do  not  wish  to 
assume  responsibility  for  losses  in  far-away  countries.  They 
play  safe  by  insisting  that  cash  accompany  order  except  in  a  few 
cases  of  exceptionally  large  importers.  The  very  existence  of 
this  type  of  credit  man  who,  by  pressure  of  his  own  craft,  is 
rapidly  nearing  extinction,  certainly  supplies  a  very  strong  reason 
for  the  control  of  credits  by  the  export  manager. 

The  Effect  of  Location. — Strangely  enough,  the  proponents  of 
the  export  manager's  credit  duties  invariably  overlook  entirely 
the  frequent  cases  apparently  on  their  side  when  the  export 
department  is  located  at  seaboard  and  the  parent  factory  is 
inland.  In  these  many  cases,  particularly  where  "seaboard" 
stands  for  "New  York,"  the  export  department's  records  are 


PASSING  ON  FOREIGN  CREDITS  351 

hundreds  of  miles  away  from  the  credit  man.  The  export  mana- 
ger has  accessible  in  his  own  city  the  bulk  of  all  credit  data  that 
is  a  matter  of  record.  He  is  surrounded  by  other  exporters 
among  whom  there  can  usually  be  found  several  with  credit 
experience  with  any  risk  on  whom  credit  is  to  be  passed.  In  such 
cases,  by  making  the  export  manager  responsible  for  foreign 
credits,  sailings  can  be  caught  that  would  be  missed  if  all  credit 
investigation  and  decision  was  centralized  at  headquarters. 

There  is,  however,  another  side  to  the  question.  Each 
exporter,  actual  and  potential,  should  examine  carefully  the 
views  of  those  who  have  decided  that  the  credit  manager  and  not 
the  export  manager  should  pass  upon  the  credit  standing  of 
importers  abroad. 

Profitable  Time  Utilization. — The  master  argument — one 
used  in  many  different  wordings — is  that  the  export  manager  can 
best  use  his  time  in  the  development  of  export  sales.  Eminent 
export  managers  who  have  assumed  and  later  dropped  foreign 
credit  work  join  with  the  highest  officers  of  other  companies  in 
the  straightforward  statement  that  until  an  exporting  manu- 
facturer has  an  entirely  adequate  volume  of  foreign  sales,  the 
export  manager's  work  should  be  entirely  devoted  to  the  selling 
end  of  merchandising.  It  is  entirely  evident  from  the  testimony 
of  many  export  managers  that  they  are  already  overworked 
with  their  present  duties,  and  that  to  add  foreign  credits  as  an 
integral  part  of  their  work  would  be  to  lay  the  traditional  straw 
on  the  camel's  back. 

This  master  argument  advanced  by  export  managers  in 
opposition  to  any  addition  to  their  selling  and  organization 
duties  is  accompanied  by  an  equally  strong  argument  by  credit 
men  and  the  high  executives  of  American  business  against  the 
export  manager's  passing  on  foreign  credits. 

"Credits  Are  Credits." — "The  credit  man  should  be  the 
credit  man,"  is  the  terse  statement  of  the  president  of  a  machine 
tool  works  with  world-wide  trade.  "The  credit  man  who 
shrinks  from  foreign  credits  is  either  a  back  number  or  a  quitter — 
or  both!"  is  the  verdict  of  a  credit  man  high  in  the  inner  circles  of 
the  National  Association  of  Credit  Men.  This  group  stands  on 
firm  ground  in  their  argument  that  "credits  are  credits,  at  home 
or  abroad."  They  assume  that  the  credit  man's  duty  is  "to 
determine  the  right  to  credit  of  individuals  and  enterprises  not 
personally  known  to  him."     This,  they  maintain  staunchly,  is 


352  EXPORT  MERCHANDISING 

exactly  the  same  task  when  the  order  comes  from  Porto  Alegre 
as  from  IndiaiiapoHs. 

The  opponents  to  the  export  manager's  crediting  of  export 
orders  insist  that  just  as  the  export  manager  becomes  expert  in 
export  selhng  by  daily  practice  in  the  art,  so  the  credit  man's 
vaunted  credit  sense  is  the  result  of  daily  study  and  practice  in  the 
art  of  credits.  It  is  indeed  strange  that  while  advancing  this 
basic  truth  they  did  not  add  that  there  is  far  more  to  the  art  of 
foreign  credits  than  merely  granting  or  refusing  credit.  The 
wide  field  of  opening  up  credit  relations  and  arranging  for 
financing  doubtful  risks  is  a  matter  in  which  the  credit  man's 
domestic  experience  has  no  counterpart  in  the  experience  of  the 
export  sales  manager^ — and  it  is  a  most  important  field. 

Existing  Credit  Equipment. — Just  as  the  advocates  of  export 
manager's  credit  phase  point  out  economies,  so  does  the  credit 
man  claim  that  his  department  can  absorb  foreign  crediting, 
handling  it  with  exactly  the  same  machinery  that  is  used  in 
domestic  credit  work. 

"It  would  be  a  rash  export  manager  who  would  claim  that  the 
credit  department  lacks  facilities  or  ability  to  handle  foreign 
credits.  For  every  economy  the  export  manager  can  prove  we 
can  show  an  equal  or  greater  economy,  because  we  have  the 
machinery  for  credit  investigation,  credit  decision,  exchange  of 
credit  information  with  other  domestic  grantors  of  foreign  credits 
and  the  filing  of  credit  reports,"  is  the  summary  of  a  Western 
credit  man.  "If  anyone  feels  that  the  crediting  of  foreign 
orders  can  be  handled  equally  well  by  either  the  export  manager 
or  the  credit  man,  then  it  is  obvious  that  preference  should  be 
given  to  the  credit  man.  These  are  sound  organization  tactics 
and  equally  applicable  to  the  relations  of  the  export  manager  with 
the  production,  traffic  and  advertising  departments.  There  is  no 
true  economy  in  using  the  export  manager  to  save  a  few  cents  in 
assembling  credit  data  in  his  own  hands  when  it  robs  the  enter- 
prise of  the  dollars  he  should  be  making  in  landing  export 
orders." 

Mutual  Advantages  of  Individual  Responsibilities. — A  forcible 
argument  from  the  standpoint  of  the  individual  for  the  credit 
man's  control  is  put  forward  by  several.  These  keen  analysts 
find  that  the  export  manager  is  judged  by  profits  on  export 
sales,  and  that  the  more  he  sells  profitably,  the  greater  his  com- 
pensation, whether  on  salary  or  on  commission.     In  similar  vein. 


c:;< 


PASSING  ON  FOREIGN  CREDITS  353 

they  point  out  that  the  credit  man  increases  in  vahie  with  tlie 
volume  of  credits  on  which  he  passes  when  coupled  with  the  per 
cent  of  credit  losses.  The  argument  continues,  "If  the  export 
manager  confines  himself  to  building  sales,  he  will  sell  more 
and  thus  give  the  credit  man  a  greater  volume  of  credits. 
Because  it  is  true  that  export  credit  losses  average  less  than 
domestic  credit  losses  per  dollar  of  sales,  every  foreign  credit 
dollar  helps  to  improve  the  showing  of  the  credit  man.  Thus, 
by  keeping  foreign  credits  with  the  credit  man  the  enterprise 
secures  greater  profits  because  of  increased  sales,  while  both 
export  manager  and  credit  man  show  to  their  best  advantage." 
A  novel  presentation  of  the  advantages  and  disadvantages  is 
quoted  from  The  World's  Markets.  It  is  in  the  form  of  a 
charge  by  a  judge  to  a  jury  of  export  men. 

THE  JUDGE'S  CHARGE 

"Hear  ye!     His  Honor,  the  Judge!" 

"Gentlemen  of  the  jury,  we  have  here  the  person  of  foreign  credits. 
It  is  for  you  to  decide  whether  his  true  guardian  shall  be  Mr.  Export 
Manager  or  Mr.  Credit  Man.  Entirely  apart  from  your  individual 
preference,  it  is  your  duty  to  decide  upon  the  merits  of  the  evidence 
that  has  been  presented  before  you  and  upon  your  deductions  from  this 
evidence. 

"You  can  eliminate  from  the  field  of  the  argument  certain  agreed- 
upon  facts.  There  is  no  dispute  that  on  the  grounds  of  abihty  Mr. 
Export  Manager  is  capal)Ie  of  the  guardianship  involved.  But  it  is 
also  agreed  that  Mr.  Credit  Man,  if  he  is  worthy  of  his  name,  is  equally 
capable.  In  a  similar  way  you  can  eliminate  offsetting  arguments. 
Both  those  who  plead  for  the  guardianship  of  Foreign  Credits  for  Mr. 
Export  Manager  and  for  Mr.  Credit  Man  prove  economies  which 
would  result  as  a  result  of  such  guardianship.  In  the  opinion  of  the 
Court  these  economies  are  of  minor  moment  in  either  case.  Dependent 
upon  the  location  of  Mr.  Export  Manager  and  dependent  upon  the 
character  of  the  credit  machinery  already  in  the  possession  of  Mr. 
Credit  Man,  these  economies  exist  or  cease  to  exist.  When  they  do 
exist  their  dollar  total  is  significant. 

"The  counsel  for  Mr.  Export  Manager's  guardianship  has  been 
pleased  to  claim  for  his  client  his  decided  interest  in  making  export  sales 
profitable  by  keeping  down  foreign  credit  losses  if  placed  under  his 
control.  There  is  no  evidence  to  prove  that  this  is  not  his  natural 
duty  and  natural  course — natural  for  purely  selfish  reasons — in  any 
event.  There  is  ample  precedent  to  show  that  any  sales  manager  of 
merit — domestic  or  foreign — recognizes  the  waste  of  promiscuous 
solicitation.     Many  well-known  cases  can  be  cited  to  prove  that  the 

23 


354  EXI'ORT  MKUCIIANDISING 

entire  trend  of  good  selling  iias  been  f(iw;ir<I  tli(>  npijlication  of  balanced 
sales  appeal  to  selected  prospective  customers,  and  because  of  sales 
economies  from  these  practices. 

"Gentlemen  of  the  jury,  it  is  for  you  to  decide  whether  'Foreign 
Credits'  are  more  'Foreign'  than  'Credits.'  The  learned  counsel  for 
Mr.  Export  Manager's  guardianship  point  out  the  many  details  in 
which  practice  in  sales  abroad  differs  from  practice  in  sales  at  home. 
These  differences  are  matters  of  fact,  and  as  such  are  admittedly  true. 
But  you  will  take  also  into  consideration  whether  these  proved 
differences  are  of  vital  importance.  You  will  note  that  in  the  list  of 
these  differences  is  it  not  claimed  that  the  credit  standing  of  an 
exporter  abroad  is  decided  upon  different  grounds  than  is  the  credit 
standing  of  a  merchant  here  at  home.  It  can,  therefore,  be  assumed 
that  the  basic  requirements,  some  combination  of  which  must  exist  in 
order  to  reach  a  favorable  credit  decision,  are  Character,  Capabilit}^ 
Capital,  Profit,  Record  of  Prompt  Payment  and  Need  of  Representation. 

"With  these  facts  before  you,  it  is  your  duty  to  decide  whether  the 
differences  in  export  practice  are  of  greater  moment  than  the  universal 
similarity  of  credit  requirements  of  the  individual  risk. 

"It  is  entirely  within  your  province  to  accompany  your  decision 
upon  the  merits  of  the  case  with  a  memorandum  relating  to  exceptions 
which  to  your  mind  fall  beyond  the  limits  of  the  ordinary  application 
of  your  verdict  Take,  for  example,  the  claim  of  the  counsel  for  Mr. 
Export  Manager's  guardianship  in  cases  where  in  the  conduct  of  the 
domestic  merchandising  of  an  enterprise  no  true  credit  department  or 
credit  man  is  required.  If  you  find  that  in  such  cases — and  it  is  admitted 
that  their  number  is  not  inconsiderable — the  claim  of  the  counsel 
for  Mr.  Export  Manager's  guardianship  is  well  taken,  then  so  state  in 
your  memorandum  in  case  you  deny  to  Mr.  Export  Manager  guardian- 
ship in  all  other  cases.  Similarly,  if  you  find  well  taken  other  claims 
such  as  may  be  included  in  cases  where  the  export  department  actually 
or  virtually  buys  from  the  parent  company  and  sells  for  its  own  account, 
you,  Gentlemen  of  the  Jury,  will  so  note  in  bringing  in  your  verdict. 

"Your  attention  is  directed  to  the  testimony  of  a  credit  manager  who 
suggested  that  in  cases  where  for  any  reason  the  credit  manager  refused 
to  give  adequate  attention  to  foreign  credits,  that  this  be  brought  to 
the  attention  of  local  or  national  credit  organizations.  It  is  proper  for 
you  to  take  cognizance  of  this  suggestion  in  the  form  of  your  recommen- 
dation for  or  against  such  type  of  action. 

"  Gentlemen  of  the  Jury,  you  have  heard  the  evidence.  Your  verdict 
should  be  determined  not  upon  sentiment  but  upon  facts  and  your 
judgment  of  facts.  A  guardianship  must  be  created  with  or  without 
exceptions.  You  will  now  retire  to  the  jury  room  for  your  considera- 
tions." 

Thus  ends  the  Judge's  Charge. 

Is  not  the  verdict  foreshadowed? 


CHAPTER  XXXII 
THE  FUNDAMENTALS  OF  FOREIGN  CREDITS 

"The  greut  (incstidii  hpforo  the  world  is  credit." — .1.  H.  Tri'Koe. 

Why  Should  Credit  Be  Extended  Abroad?  Illustration  of  the  Nature 
of  Foreign  Credits.  The  Function  of  Foreign  Credits.  How  Credits  Increase 
Sales.  The  Time  Element  in  Credits.  The  Relation  of  Turn-over  to  Extension 
of  Time.  How  Per  Cent  of  Profit  Affects  the  Granting  of  Credits.  Examples 
of  Credit  Granting.  Reasons  for  Taking  Cash  Discounts.  The  Individual 
is  the  Domiimnt  Factor  in  Foreign  Credit  Granting.  Credit  Is  Personal  and 
not  National.  The  Three  C's  of  Credit.  Credit  Investigations  before  Solicita- 
tion of  Orders.     Sales  Use  of  Credit  Data. 

There  is  no  reason  why  every  export  manager,  export  execu- 
tive and  credit  man  should  not  fully  understand  the  principles 
and  practices  involved  in  extension  of  credit  to  importers 
abroad.  It  is  entirely  a  simple,  sound  and  safe  branch  of 
merchandising.  Its  problems  are  not  problems  involving  a 
difficulty  in  understanding  the  problem  as  a  whole,  but  are  the 
very  human  problems  of  the  individual  credit  risk.  The  game 
of  billiards  furnishes  an  excellent  illustration  of  this  difference. 
The  fundamental  of  billiards  is  simple — to  hit  the  two  object 
balls  with  the  cue  ball.  The  execution  of  the  principle  varies 
from  ridiculous  simplicity  to  highly  skilled  mental  and  manual 
effort. 

What  Is  Credit? — The  first  question  that  must  be  answered  is 
"Why  should  credit  be  extended  abroad?"  To  answer  such  a 
question  fully  would  require  an  investigation  into  the  basic  laws 
of  merchandising.  Primarily,  credit  is  a  means  to  increase 
business.  In  its  simplest  form  it  is  the  loan  of  an  axe  to  a  man 
who  will  chop  with  it  both  wood  for  himself  and  for  the  grantor 
of  the  loan.  The  second  step  would  be  the  purchase  of  an  axe 
on  credit,  payment  to  be  made  with  an  agreed  quantity  of 
wood.  The  necessity  for  credit  is  easily  seen  in  this  simple 
illustration.  The  man  who  made  the  axe  could  make  another 
one,  even  when  very  possibly  he  lacked  the  strength,  skill  or 
desire  to  chop  wood.  It  is  entirely  probable  that  many  early 
credit  problems  were  of  exactly  this  nature. 

355 


356  EXPORT  MERC II AND! SING 

It  is  well  to  carry  the  credit  lunctioii  to  a  iiiodern  and  to  an 
international  transaction.  By  an  exanijole,  the  use  of  foreign 
credits  can  be  clearly  illustrated  so  as  to  define  their  nature. 
This  will  show  conclusively  that  credit  extension  is  not  in  any 
way  the  same  as  a  discount,  rebate  or  similar  type  of  sales 
inducement.  Above  all  else,  each  exporter,  actual  and  potential, 
should  become  positive  in  his  knowledge  that  length  of  credit  is 
not  a  proper  matter  for  competitive  effort.  If  one  will  but 
examine  this  one  transaction  closely  he  will  at  the  same  time 
kill  in  his  mind,  once  and  for  all,  the  misconception  of  "long 
foreign  credits" — a  bugaboo  still  present  in  the  minds  of  many 
who  have  failed  to  get  to  bed  rock  in  their  thought. 

An  International  Example. — In  this  typical  international 
transaction  there  is  on  one  end  the  A  B  C  D  Manufacturing 
Co.  of  Boston;  on  the  other  hand,  Enrique  Gonzales  of  Arequipa, 
Peru.  It  can  be  assumed  that  the  A  B  C  D  Manufacturing  Co. 
have  decided  to  seek  increased  sales  through  export  trade  for 
reasons  of  desired  added  profit,  insurance  for  themselves  against 
periods  of  domestic  financial  depression,  and  to  balance  domestic 
seasonal  demand^ — ^three  compelling  and  sound  reasons  for 
exporting.  The  "A  B  C  D"  has  ample  capital  for  its  ordinary 
business  requirements,  and  extends  credit  at  home  on  the  usual 
but  crude — pitifully  crude — basis  of  open  accounts. 

Enrique  Gonzales  of  Arequipa,  Peru— name  and  address 
fictitious — can  be  assumed  to  be  a  young  man  in  his  early 
thirties.  His  modest  earnings  have  been  invested  largely  in 
the  equipment  of  rented  quarters.  He  has  the  best  of  records 
in  his  home  city  of  Arequipa.  He  has  shown  positive  evidence 
of  both  personal  and  business  morality.  Still  a  young  man,  he 
has,  nevertheless,  by  diligence  and  intelligence,  paid  debts  left 
by  his  father.  He  has  been  in  business  for  himself  for  a  year, 
and  has  shown  marked  ability  to  conduct  an  ordinary  retail 
business. 

Looking  into  the  Future. — Turn  again  to  the  A  B  C  D  Manu- 
facturing Co.  What  are  their  hopes  in  Arequipa?  It  can  be 
assumed  that  "A  B  C  D"  manufacture  an  article  sold  at  home 
and  abroad,  because  of  its  nature,  on  the  "dealer  agent"  plan — 
the  exclusive  agency  for  a  limited  territory  being  given  to  a 
single  retailer,  as  is  the  case  with  certain  branded  shoes,  phono- 
graphs, automobiles  and  similar  products.  "A  BCD,"  looking 
well  into  the  future,  are  far  more  interested  in  the  relative  rank  of 


THE  FUNDAMENTALS  OF  FOREIGN  CREDITS  357 

retailers  ten  years  ahead  than  the  temporary  rank  in  the  present. 
Beyond  all  this,  the  other  logical  candidates  in  Arequipa  are 
already  representing  competing  products. 

With  these  preliminary  explanations,  it  becomes  clear  that  the 
situation  is  extremely  simple.  The  A  B  C  D  Manufacturing  Co. 
cannot  make  profits  by  sales  in  Arequipa  without  representation ; 
Enrique  Gonzales  has  character  and  ability  to  sell  goods  and 
to  manage  a  retail  business,  but  lacks  surplus  funds  sufficient  to 
buy,  cash  in  advance,  a  stock  of  the  size  he  will  need  to  have 
adequate  variety.  If  the  A  B  C  D  Manufacturing  Co.  refuse  to 
sell  except  for  cash  in  advance  or  upon  delivery,  they  limit  their 
own  sales  volume,  for  such  a  limitation  will  bar  Enrique  Gonzales 
from  purchase.  The  remedy  is  seldom  found  in  shipments  on 
consignment,  the  title  to  remain  with  the  seller  until  goods 
are  sold. 

Solving  a  Problem. — The  one  clear  answer  to  the  problem  is 
one  that  every  man  of  business  must  see  at  a  glance.  The 
A  B  C  D  Manufacturing  Co.  are  in  a  position  to  say  to  them- 
selves, "We  need  export  sales  in  order  to  make  export  profits  and 
to  accomplish  other  highly  desirable  ends.  We  want  our  export 
trade  to  be  well  balanced,  not  only  in  number  of  countries  in- 
cluded, but  also  in  the  number  of  cities  and  towns  within  each 
country.  Arequipa  is  a  city  in  which  sooner  or  later  we 
must  be  represented  in  order  fully  to  serve  users  in  Peru,  and  to 
bring  to  ourselves  profit  from  such  service. 

''To  secure  sales  and  earn  profits  in  Arequipa  over  a  long  term 
of  years  we  must  have  representation.  This  representation 
must  be  of  a  type  entirely  acceptable  to  the  consuming  public 
of  Arequipa — those  who  are  to  buy  and  use  our  product.  Our 
resident  representative  must  be  a  man  of  honor  and  of  ability, 
so  that  he  will  increase  in  power  and  rank  in  his  city,  and  will 
in  each  succeeding  year  become  a  better  outlet  for  our 
merchandise." 

Analyzing  a  Sales-credit  Situation. — The  A  B  C  D  Manufactur- 
ing Co,  would  then  continue  the  argument,  "Enrique  Gonzales 
is  an  honest,  capable  man.  He  will  be  an  admirable  agent  and 
will  sell  our  products  wisely  and  in  increasing  volume.  He  is 
honest,  so  we  can  count  on  him  to  pay  us  from  the  proceeds  of  his 
sale.  He  is  capable,  so  we  can  count  on  his  selling  rapidly  so  that 
payments  will  not  be  long  delayed, 

"Therefore,  it  is  wise  for  us  to  send  an  ndoqunto  initial  stock 


358  EXPORT  MERCHANDISING 

of  our  products  to  Enrique  Gonzales.  We  will  safely  figure  that 
within  ninety  days  from  the  time  he  receives  his  stock,  he  will 
have  sold  a  sufficient  portion  of  it  to  pay  for  his  entire  purchase. 
Since  he  is  honest,  he  will  pay  his  draft  when  due  from  the 
proceeds." 

Two  Dangers  in  Moral  Risks. — This  is  essentially  sound 
reasoning.  This  is  proved  countless  times  every  day  of  the 
year  from  the  experience  of  exporters  of  every  country  with 
"risks"  that  have  character  and  ability  coupled  with  limited 
resources.  If  this  is  true,  where  is  the  danger?  There  are  only 
two  dangers.  The  judgment  of  the  credit  man  as  to  the  import- 
er's honesty  or  his  business  ability  may  be  wrong.  The  man  may 
die  or  become  incapacitated.  In  the  first  case  the  importer  may 
select  the  exact  time  of  the  particular  transaction  we  are 
describing  to  decamp,  or  he  may  be  driven  to  bankruptcJ^  In 
the  second  case  the  importing  enterprise  depending  upon  a  single 
man  and  without  large  funds  may  well  not  pay  from  the  estate 
the  full  amounts  due. 

But  credit  men  do  not  fear  these  contingencies.  The  informa- 
tion they  secure  from  a  reliable  source  leaves  little  to  the  imagina- 
tion, either  as  to  the  importer's  business  morality  or  ability.  The 
chance  of  death  or  disabling  injury  during  any  half-year  is  remote, 
and  it  is  probable  that  even  in  the  event  of  either,  the  proceeds  of 
liquidation  based  on  selling  price — will  be  ample  to  pay  for  the 
actual  cost  of  the  goods  and  expenses  incurred. 

Profits  from  Credits. — Thus  the  credit  medium,  in  the  trans- 
action just  reviewed,  has  made  possible  a  profit  to  the  manufac- 
turer which  he  could  not  otherwise  have  secured.  The  desire 
of  the  importer  with  limited  capital,  and  his  proved  ability, 
would  have  been  no  asset  to  him  or  to  the  manufacturer  unless  the 
latter  loaned  him  goods  for  ninety  days  after  presentation  of  draft. 
With  the  actual  goods  on  hand,  the  sales  ability  of  the  importer 
converted  them  quickly  into  money,  which  made  the  complete 
transaction  possible. 

The  Time  Element. — Thus  is  passed  very  lightly  over  a  most 
important  phase  of  foreign  credits.  The  basic  idea  of  credit  is 
not  the  amount  of  the  loan,  but  the  time  extended  in  the  loan. 
This  statement  is  not  as  radical  as  it  seems  at  first  glance.  With- 
out some  time  limit  or  some  interest  charge,  obviously  a  loan 
becomes  a  gift.  At  best  it  becomes  a  most  indefinite  asset. 
Only  the  experienced  credit  man  takes  the  right  angle  toward  the 


THE  FUNDAMENTALS  OF  FOREIGN  CREDITS  359 

time  element.  The  inexperienced  invariably  figure  on  the 
amount  of  time  they  are  willing  to  extend.  Behind  this  thought 
is  the  thought  of  their  own  resources  and  their  subconscious 
desire  to  receive  payment  before  any  untoward  events  occur. 

The  experienced  credit  man  looks  primarily  at  the  time  needed 
by  the  buyer.  Credit,  to  be  credit,  must  enable  the  buyer  to 
pay  his  obligation  from  the  proceeds  of  his  sale.  There  can  well 
be  ignored  here  the  entirely  different  type  of  credit  which  is 
extended  to  a  consumer  by  a  dealer,  except  as  credit  to  a  dealer 
enables  him,  in  turn,  to  extend  credit  to  the  consumer.  There- 
fore, it  can  be  seen  that  from  this  viewpoint  the  length  of  credit 
rightly  to  be  extended  depends  upon — 

1.  The  rapidity  with  which  goods  will  be  sold 

2.  The  per  cent  of  profit  to  the  dealer. 

These  two  elements  are  of  equal  importance.  Both  lead  to 
the  same  result  in  money  available  at  a  given  time. 

Percentage  of  Profit  to  Dealer. — A  single  example  will  prove 
this  seldom-realized  truth.  Enrique  Gonzales  buys  $1,000  (laid 
down  cost)  in  merchandise,  which  arrives  on  May  first.  If  the 
lot  is  sold  by  him  at  a  profit  of  100  per  cent  on  cost— $2,000 — in  2 
months,  he  will  average  to  have  sold  one-half  the  shipment  for 
$1,000  on  June  first,  and  can  discharge  his  obligation  in  full  from 
his  proceeds.  This  1  month  will  show  him  a  profit  of  $500  on 
goods  sold.  If,  on  the  other  hand,  the  merchandise  shows  him  a 
50  per  cent  profit  on  cost  and  he  sells  the  entire  lot  in  1  month,  he 
will  have  $1,500  available.  The  profit  to  him  in  1  month  will  be 
$500,  as  before,  because  his  turnover  was  twice  as  rapid. 

Turn-over  a  Credit  Element.^ — It  thus  becomes  clear  that  the 
time  element  in  credit  is  not  entirely  a  matter  of  whim.  It  also 
becomes  clear  that,  gauged  from  these  standards,  credit  should 
be  based  from  the  time  goods  are  available  for  sale  in  the  im- 
porter's establishment.  As  a  matter  of  fact,  in  the  past  ten  years 
in  particular,  time  extension  in  foreign  credits  has  gradually  been 
forced  toward  this  basis. 

It  is  seldom  today  that  we  hear  of  "date  of  invoice"  draft. 
The  very  term  indicates  that  the  time  extension  was  based  upon 
the  exporter's  own  financial  problem  as  he  saw  it,  and  not  on  the 
importer's  needs.  More  and  more  the  "Sixty-day  sight  draft" 
is  becoming  the  equivalent  of  "sixty-day  date  of  arrival"  draft, 
because  each  year  more  and  more  banks  are  not  presenting  drafts 
until  goods  arrive.     This  is  either  of  their  own  volition  or  because 


3()0  EXPORT  MERCHANDISING 

importers  refuse  to  accept  drafts  until  goods  arrive.  In  cities 
like  Rio,  where  it  frequently  required  more  than  a  month  to  clear 
goods  after  arrival,  it  will  be  found  that  exporters — experienced 
exporters — recognize  this  fact.  They  arrange  for  drafts  to  be 
presented  for  acceptance  after  goods  have  been  cleared. 

"Arrival"  Drafts  Sound. — It  will  not  surprise  careful  students 
of  the  time  element  in  foreign  credit  extension  if  in  two  more 
decades  the  documentary  time  sight  draft  becomes  all  but  uni- 
versally recognized  as  definitely  on  the  basis  of  "presentation  for 
acceptance  on  arrival  of  goods"  in  most  cities,  and  on  the  basis 
of  "presentation  upon  clearance  of  goods"  in  cities  like  Rio. 

Credit  Extension  to  Large  Importers. — In  the  single  transaction 
which  was  examined  stress  was  laid  upon  the  limited  financial 
resources  of  Enrique  Gonzales.  This  was  purposely  emphasized 
to  magnify  the  necessity  of  credit.  Change  the  name  of  the 
importer  to  Hartwell's,  Ltd.,  of  Bombay — name  and  city  ficti- 
tious—and credit  this  importer  with  ample  capital  in  addition 
to  honor  and  business  ability.  The  need  for  credit  still  exists. 
The  function  of  credit  is  the  same  as  in  the  case  of  Enrique 
Gonzales. 

Hartwell's,  Ltd.,  themselves  sell  on  credit.  The  A  B  C  D 
Manufacturing  Co.  in  extending  credit  to  Hartwell's,  Ltd., 
enables  them  in  turn  to  extend  credit,  and  thus  to  pay  "  A  B  C  D  " 
from  the  proceeds  of  current  sales  at  the  end  of  the  credit 
period,  and  by  extending  credit  "A  B  C  D"  does  not  insist  that 
Hartwell's,  Ltd.,  pay  from  past  profits — resources — and  does 
not  force  them  to  borrow  for  the  particular  purpose  of  payment 
of  obligations  to  "A  B  C  D." 

THE  FUNCTION  AND  USE  OF  THE  CASH  DISCOUNT 

Where  cash  discounts  are  taken,  it  will  be  found  upon  analysis 
to  fall  into  one  of  these  groups : 

1.  Cash  payments  demanded. 

2.  Greater  resources  available  than  needed  in  the  ordinary  conduct  of 
the  importer's  business 

3.  Money  has  been  borrowed  in  order  to  discount  bills. 

The  first  case  explains  itself.  Some  enterprises  are  sold  only 
on  cash  terms.  This  is  due  to  lack  of  record  of  success,  question- 
able honesty  or  questionable  ability.  The  second  group  includes 
a  large  number  of  importers  in  all,  but  a  small  percentage  of  the 
whole,  whose  profits  are  so  great  that  they  cannot  wisely  be 


THE  FUNDAMENTALS  OF  FOREIGN  CREDITS  361 

reinvested  in  the  business  and  can  profitably  be  used  in  anticipat- 
ing payments  because  of  the  high  yield  offered  by  the  discount 
percentage.  This  high  rate  of  yield  offers  opportunity  also  to 
firms  without  cash  resources.  Such  firms,  when  they  enjoy  the 
confidence  of  their  bankers,  can  borrow  easily  in  order  to  make 
the  profit  possible  by  discounting.  Many  banks  feci  that  a  loan 
made  in  order  to  discount  bills  is  based  on  the  most  sound  of 
reasons,  and  encourage  loans  of  this  type  in  every  way. 

Interest  Rates  and  Discounting. — The  high  yield  in  times  when 
gilt-edge  risks  can  borrow  at  from  4  to  5  per  cent  is  easily  com- 
puted. John  Jones  is  offered  by  "A  B  C  D"  the  option  of  pay- 
ment at  sight  less  2^-^  per  cent  (the  usual  rate  of  international 
commerce)  or  of  60-day  sight  draft  terms.  This  means  that  if 
he  chooses  sixty  days'  credit  he  pays  23^^  per  cent  for  the  privilege. 
If  a  year  was  made  up  of  360  days — six  full  sixty-day  periods — 
John  Jones  would  pay  15  per  cent  per  year  for  the  privilege  of 
time  credit  extension  as  against  discounting. 

Why  are  not  all  payments  anticipated  because  of  this  possible 
yield  on  investment?  ,  To  this  fair  question  there  are  several 
sound  answers.  In  many  cases  the  importer  can  make  well  over 
15  per  cent  by  using  in  his  own  enterprise  not  only  all  his  own 
money  but  also  all  he  can  borrow.  In  either  case  the  importer 
is  not  of  such  sound  standing  as  to  enable  him  to  borrow  the 
large  amounts  needed  to  enable  him  to  discount  all  his  purchases. 
In  still  other  cases  the  element  of  exchange  is  the  deciding  factor. 
If  a  draft  with  option  of  cash  discount  is  presented  when  exchange 
is  favorable  many  importers  make  it  a  rule  to  discount.  If 
exchange  is  unfavorable,  when  the  draft  is  presented  it  is  merely 
accepted  and  payment  is  deferred  either  until  exchange  is 
better  or  until  maturity. 

Will  the  Cash  Discount  Be  Abolished? — It  may  be  generations 
before  the  cash  discount  in  international  commerce  is  abolished. 
It  is  in  many  ways  an  excresence  on  trade  performing  no  useful 
function.  There  are  better  and  more  logical  methods  of  comput- 
ing the  worth  of  payment  before  maturity  than  the  bald  offering 
of  a  concession  entirely  out  of  proportion  to  the  money  value  of 
the  advance  payment.  That  the  cash  discount  as  ordinarily 
used  is  absurdly  unscientific  can  easily  be  shown  in  the  practice 
of  exporters  to  extend  the  same  per  cent  whether  the  draft  is  at 
60  or  at  90  days'  sight — roughly  a  difference  in  yield  of  over  5 
per  cent  per  annum. 


3G2  EXPORT  M  EEC  II  AN  ni  SI  NO 

All  entirely  iliflerent  use  of  the  cush  discount  should  be  men- 
tioned to  clear  up  the  existing;  confusion  on  this  minor  but 
important  phase  of  export  trade.  Many  good  credit  men  test  the 
bank  standing  of  the  little-known  exporter  by  coupling  a  lower 
merchandise  discount  with  a  high  cash  discount — often  reaching 
5  or  even  10  per  cent.  The  importer  who  chooses  credit  to 
discount  in  such  circumstances  virtually  admits  that  his  local 
banks  are  not  confident  of  his  ability  to  conduct  his  business 
properly.  On  a  10  per  cent  cash  discount  basis  as  against  a  sixty- 
day  sight  draft  the  yield  by  discounting  would  reach  a  total  of 
60  per  cent  per  annum.  The  importer  who  could  not  induce  his 
bank  to  loan  him  money  to  secure  this  yield  would,  indeed,  be  a 
poor  risk  and  one  from  whom  some  more  definite  security  than 
his  mere  accepted  draft  should  be  requested. 

These  exceptionally  high  cash  discounts  extended  for  such  a 
definite  purpose  are  only  distantly  related  to  discounts  theoret- 
ically intended  to  represent  an  approximation  of  the  value  of 
money  promptly  in  the  hands  of  the  exporter. 

The  Practice  of  Foreign  Credits. — In  ,the  examples  examined 
and  in  the  discussion  attendant  on  these  examples,  at  least 
elementary  thought  has  been  given  to  the  credit  function  and  to 
the  foundation  upon  which  credit  rests.  Only  to  the  minimum 
necessary  to  make  the  examples  complete  has  'practice  in  foreign 
credits  been  touched  upon — the  wonderful  field  which  is  the 
delight  of  the  good  credit  man  and  the  despair  of  the  timid  and 
uninformed.  The  broader  phases  of  foreign  credits  have  been 
described.  Individual  cases  have  been  cited,  not  as  individual 
credit  problems,  but  as  examples  of  types  of  credit  risks,  and  have 
been  used  merely  to  visualize  the  principles  of  foreign  credits. 

Credit  Is  Personal  Not  National. — In  the  practice  of  foreign 
credit  granting,  the  individual  is  the  dominant  factor.  This  is 
well  proved  in  the  case  of  Mexico  in  the  period  from  1912  to  1920. 
During  these  years,  Mexico  as  a  nation  was  decidedly  not  a  sound 
credit  risk.  But  individual  enterprises  within  Mexico  were 
always  good  credit  risks  in  the  eyes  of  good  export  credit  men. 
This  has  been  proved  by  the  unbroken  extension  of  credit  and 
shipment  of  goods  by  exporters  fortunate  enough  to  have  their 
foreign  credits  passed  upon  by  men  of  courage,  judgment  and 
experience.  One  New  England  manufacturer  has  the  proud 
record  of  continuous  relations  on  a  pure  credit  basis  in  Mexico 
cou  pled  with  shipment  of  every  order  sent  in  good  faith  durin, 


THE  FUNDAMENTALS  OF  FORE  KIN  CREDITS  803 

the  oight-year  period  mentioned,  and  with  a  total  loss  of  less  than 
S500.  This  will  unquestionably  be  reduced  to  a  fraction  of  this 
total  when  conditions  become  entirely  normal,  because  their 
customers  at  present  unable  to  pay  will  later  liquidate  the 
indebtedness  they  insist  upon  acknowledging  as  their  first  duty. 
Ledger  Experience  as  Proof. — There  is  further  proof  that  in 
business  transactions  credit  is  personal  and  not  national  in  nature, 
and  on  this  basis  does  not  change  with  race,  creed  or  color  of 
skin.  One  of  the  most  common  misconceptions  of  export  trade 
is  that  certain  nations  are  made  up  of  races  of  individuals  all 
of  whom  are  tricky  and  dishonest.  This  is  proved  to  be  false 
by  the  ledger  experience  of  exporters  who  for  centuries  have  traded 
without  credit  losses  over  ordinary  domestic  average  in  these 
countries.  These  exporters  have  based  their  extension  of  credit 
on  the  individual,  and  focussed  their  examination  upon  the  indi- 
vidual. It  would  be  surprising,  on  this  sound  basis,  if  their 
losses  were  greater  than  normal. 

THE  FAMILIAR  "THREE  C'S" 

The  basis  for  credit  to  the  individual  is  his  Character,  Capa- 
bility and  Capital — the  three  ''C's"  which  are  familiar  to  every 
credit  man  in  domestic  or  foreign  fields. 

Character — an  Absolute  Essential. — Every  sound  credit  risk 
must  have  Character — positive  business  morality — the  red- 
blooded  intention  to  pay  debts  incurred  at  time  of  maturity. 
There  are  credit  men  who  are  wont  to  ignore  this  truth  and  to 
feel  that  financial  resources  plus  capability  are  sufficient.  This 
is  fallacy.  The  credit  man  who  is  clever  enough  to  have  cause 
to  believe  that  he  can  wisely  extend  credit  to  the  dishonest  should 
engage  himself  in  an  entirely  different  profession.  Credit — 
foreign  or  domestic — is  based  squarely  upon  the  Character  of 
both  buyer  and  seller.  The  day  of  the  commercially  dishonor- 
able, if  it  ever  truly  existed,  is  long  since — and  happily — past. 

Capability — the  Forecast  of  the  Future.— Capability — the 
sagacity  and  execution  which  enables  its  possessor  to  prosper 
deservedly  in  business — is  second  in  importance  to  Character. 
Credit  extension  is  based  upon  the  future — not  upon  the  present. 
The  credit  question  is  not  alone  what  a  risk  is  a])le  and  willing 
to  pay  today.  It  is  what  the  risk  will  be  able  to  pay  at  the  time 
the   debt   matures.     Capability   on   the   part   of   the   importer 


3G4  EXPORT  MERCHANDISING 

is  the  force  that,  in  advancing  the  interest  of  his  business,  insuies 
payment  when  his  debts  mature.  Because  of  this  fact,  Capa- 
biHty  is  ranked  as  a  credit  asset  higher  than  Capital.  Capital 
may  be  lost  between  the  time  the  debt  was  contracted  and  the 
time  the  obligation  became  due,  and  lost  solely  because  of  lack 
of  Capability.  Character  is  powerful,  but  unless  coupled  with 
either  or  both  Capability  and  Capital  it  stands  merely  for 
intentions. 

Capital — Protection  against  the  Unexpected.^ — Capital — 
money — financial  resources  when  accompanied  by  Character — 
intention  to  pay,  is  most  powerful.  Capital  insures  against  the 
improbable — against  the  unknown.  Capital  is  protection  in 
times  of  domestic  financial  depression  in  the  country  of  the 
importer.  Capital  carries  on  the  conduct  of  the  enterprise  in  the 
face  of  unexpected  losses.  Capital  makes  possible  the  full  power 
of  Character  and  Capability  by  removal  of  natural  limitations. 
Capital  increases  profits  by.  enabling  the  enterprise  to  buy  in 
accordance  with  the  full  needs  of  its  market,  by  attracting  on 
adequate  compensation  brains  that  will  advance  its  interests,  by 
making  possible  adequate  establishments  and  equipment  and  by 
enabling  the  merchandising  brains  of  the  enterprise  to  operate 
with  freedom. 

The  credit  man  who  fears  to  pass  upon  foreign  credits  when 
informed  of  their  Character,  Capability  and  Capital  is  not 
deserving  of  the  name.  He  is  not  cowardly,  however,  if  he  checks 
his  judgment  by  the  proved  past  or,  in  absence  of  detailed  infor- 
mation on  the  three  "C's,"  relies  upon  an  entirely  different 
element.  This  other  angle  from  which  the  right  to  credit  is 
often  determined  is  "reputation  for  prompt  payment" — the 
actual  ledger  experience  of  other  exporters  with  the  individual 
risk  involved. 

The  Right  to  Credit.— Thus  if  IVIay  Foo  Sun  of  Shanghai- 
name  and  place  fictitious — is  found  to  have  met  all  obligations  in 
a  business-like  manner  in  his  dealings  with  all  others  who 
have  sold  him  on  credit  terms,  the  presumption  is  that  he  will  do 
likewise  in  other  cases.  Indeed,  so  strong  is  this  presumption 
and  so  true  has  it  proved  as  a  test,  that  in  absence  of  other  evi- 
dence "reputation  for  prompt  payment"  is  frequently  considered 
ample  basis  for  decision.  This  factor  in  foreign  credit-granting 
is  better  appreciated  by  credit  men  each  year.  A  generation 
ago  each  credit  manager,  with  the  exception  of  a  few  far-seeing 


THE  FUNDAMENTALS  OF  FOREIGN  CREDITS  365 

men,  felt  that  their  own  ledger  experience  with  foreign  risks  had 
been  secured  at  so  great  expense  that  they  were  not  justified  in 
giving  it  to  others.  Today  the  exact  reverse  is  the  case,  as  will 
be  seen  in  our  consideration  of  sources  of  foreign  credit 
information. 

In  the  actual  handling  of  foreign  credits  the  best  practice 
calls  for  investigation  before  an  order  is  solicited.  The  best 
practice  calls  also  for  investigation  of  the  source  of  an  unsolicited 
inquirer  before  the  order  is  received.  The  reason  why  this  has 
become  the  best  practice —  and  it  is  still  confined  to  a  handful  of 
advanced  exporters — lies  in  the  economy  of  effort  and  betterment 
of  service  which  the  best  practice  makes  possible. 

DANGERS  AND  WASTE  OF  PROMISCUOUS  SALES 
SOLICITATION 

Investigation  of  the  prospective  customer  before  solicitation 
of  his  patronage  is  sound  business  economics.  There  is  only 
waste  in  efforts  that  result  in  securing  an  order  which  is  not 
shipped  because  it  cannot  be  credited.  It  is  far  better  to  confine 
sales  effort  to  desirable  prospective  customers  than  to  solicit 
indiscriminately.  It  is,  indeed,  strange  that  in  these  days  when 
so  much  attention  is  paid  to  the  character  of  readers  of  magazine 
and  newspaper  advertising,  that  the  identical  principle  involved  is 
not  commonly  considered  basic  in  export  selling. 

Credit  investigation  of  the  unsolicited  inquirer  is  sound  from 
the  standpoint  of  service.  The  ideal  of  shipping  service  is  to 
forward  goods  by  the  first  steamer  sailing  after  receipt  of  order. 
The  maintenance  of  this  standard  inevitably  must  depend  upon 
the  crediting  of  the  import  order  as  soon  as  it  reaches  the  foreign 
credit  department.  This  ideal  cannot  be  attained  unless  the 
credit  man,  acting  upon  data  secured  in  advance,  has  material  on 
which  this  prompt  and  sound  decision  can  be  reached. 

Advance  Data  on  Prospective  Customers.^ — Without  invading 
the  field  of  export  selling  on  this  point,  it  is  fair  to  make  the 
statement  that  the  securing  of  advance  data  does  not  involve  an 
unjustified  expense.  Data  secured  in  advance  for  the  crediting 
of  export  sales  is  of  utmost  value  in  securing  export  sales,  and  as 
such  the  expense  is  properly  chargeable  to  both  sales  and  credit 
departments.  In  similar  vein,  the  best  practice  of  advanced 
exporters  calls  for  cabled  "advice  of  orders"  taken  from  new 


3GG  P.XPORT  MERCHANDrstNa 

accounts  "oy  cither  agents  or  salesmen.  These  "advice  of  order" 
caljlcs  hav(>  phrases  rehiting  to  the  credit  standing  of  the  risk 
and  method  of  payment  involved.  But  their  chief  function  is 
service,  and  the  portion  fairly  to  be  charged  to  the  credit  end  is 
small.  When  a  well-constructed  private  cable  code  is  used 
expense  is  negligible  in  proportion  to  amounts  involved  and  results 
secured. 

Credit  Sense. — There  is  ample  opportunity  for  the  credit  man 
to  utilize  his  credit  sense  in  passing  upon  the  orders  which  the 
export  department  secures.  Contrary  to  the  impression  of  the 
new-comer  to  foreign  credit  fields  there  is  wealth  of  data  available 
upon  importers  abroad.  It  is  usual  to  find  in  the  credit  files  of  the 
long-time  importer  far  more  complete  information  than  is  held 
on  similar  types  of  domestic  customers.  Export  credits  are 
based  upon  decisions  made  from  a  knowledge  of  the  individual 
risk's  three  "C's" — not  by  cold  symbols  in  a  rating  book. 


CHAPTER  XXXIII 
THE  FOREIGN  CREDIT  MAN  AS  A  MERCHANDISER 

"All  employees  are  expected  to  work  toward  the  making  of 
profits  for  this  company.  Every  employee,  whether  in  shop  or 
office,  can  but  help  in  some  degree  to  be  a  salesman  of  our  products." 

— Herbert  E.  Cushman. 

The  New  Conception  of  the  Foreign  Credit  Man's  Sphere  of  Action. 
Example  of  Unusual  Financing.  The  Sales  Angle  in  the  Need  of  Represen- 
tation Factor  of  Credits.  How  a  Credit  Manager  Developed  an  Agent's  Ability 
to  Buy  Largely.  The  Credit  Man  as  a  Sales  Prophet.  Cooperation  between 
Export,  Sales  and  Credit  Departments. 

The  securing  and  holding  of  a  foreign  business  must  come  from 
the  closest  of  cooperation  between  the  selling,  crediting  and  col- 
lection departments.  The  credit  man  must  be  willing  to  admit 
that  prompt  shipments  are  essential  and  bend  every  effort  to 
make  these  possible.  The  collection  end  must  realize  that 
continued  good  will  and  purchases  are  worth  more  than  the 
interest  on  a  few  days  saved  by  tactless  insistence.  The  sales 
end  must  decide  that  it  is  part  of  its  duty  to  know  something  of 
the  standing  of  the  prospective  customer,  or,  when  this  is  impossi- 
ble, ensure  either  remittance  with  order  or  references.  Other- 
wise, the  greatest  profit  over  a  term  of  years  will  never  result. 

Indirect  Financing. — A  foreign  credit  manager  in  St.  Louis 
saved  a  $30,000  Swiss  government  order,  placed  through  a  most 
unreliable  and  undesirable  dealer,  by  arranging  for  its  financing 
through  a  Belgian  banking  institution.  The  credit  man  knew 
that  the  dealer  was  unreliable.  When  the  export  sales  end 
admitted  the  certainty  of  this,  it  also  admitted  that  it  saw  no 
way  to  complete  the  sale.  The  credit  man  knew  that  there  must 
exist  a  means  to  finance  an  order  originating  with  a  reliable  buyer, 
such  as  this  government,  and  found  the  means. 

Interpolation  of  Bank. — An  energetic  agent  with  little  capital 
had  been  given  all  the  Indian  peninsula  and  his  credit  limit  was 
reached  with  his  first  order.  The  sales  end  had  failed  to  secure 
his  consent  to  having  orders  billed  direct  to  merchants  and  his 
commission  passed  separately,  on  account  of  the  agent's  desire  to 

367 


368  EXPORT  MERCHANDISING 

use  the  Anicricau  manufacturer's  high  rank  as  an  asset  in  estab- 
lishing his  local  credit  and  standing.  The  credit  man,  thor- 
oughly convinced  of  the  agent's  honesty  and  ability,  decided 
that  if  some  method  could  be  applied  to  curb  his  tendency  toward 
over-expansion  that  he  would  be  a  profit-making  connection, 
provided  he  could  operate  on  a  sufficiently  liberal  credit  basis  to 
capitalize  his  selling  ability.  As  a  result,  three  American  firms 
for  whom  he  acted  as  resident  representative  arranged  with  a 
Bombay  bank  so  that  his  accounts  receivable  were  placed  in  its 
charge,  while  the  agent  was  given  credit  in  proportion  to  his 
credit  losses.  This  in  no  way  hampered  his  legitimate  sales 
activity  but  was  a  safety  valve  on  his  tendency  to  sell  every 
possible  buyer,  and  as  it  was  handled  tactfully  made  him  feel  of 
greater  importance. 

As  a  matter  of  fact,  the  arrangement  enabled  him  to  make  far 
greater  profit  by  widening  his  sales  horizon.  He  now  has  four- 
teen salesmen  covering  India,  and  discounts  all  drafts. 

Sales  Values  in  Financial  Statements. — Another  side  light  on 
the  credit  man  as  a  merchandiser  is  often  seen  through  his 
knowledge  of  the  varying  capability  of  foreign  customers.  To 
the  average  sales  manager  a  "bank  statement"  showing  assets 
and  liabilities  is  a  mystery  and  seemingly  in  no  way  of  interest 
to  the  sales  end  unless  the  showing  of  assets  is  inferior  to  the 
debit  column.  To  the  real  credit  man  such  a  statement  is  a 
mental  photograph  of  the  merchant's  desirability  as  a  customer. 
If  a  merchant's  accounts  receivable  are  in  too  great  proportion 
to  the  annual  sales  it  shows  at  a  glance  poor  credit  and  collection 
methods,  which  will  hamper  if  not  kill  the  growth.  This  very  vital 
kind  of  vital  information  kept  an  Ohio  exporter  from  making  a 
serious  mistake  in  Japan  5  years  ago.  The  export  manager  had 
practically  decided  to  offer  an  exclusive  agency  to  an  importer 
who  has  since  failed,  instead  of  a  less  able  letter-writer  whose 
annual  statements  showed  exceptional  business  sagacity  which 
has  since  been  reflected  in  our  rapid  advance  in  the  land  of  Nippon. 

The  Credit  Man  as  a  Sales  Prophet. — Every  good  export 
manager  knows  that  the  customer  who  is  gaining  ground  in  his 
own  market  is  most  desirable.  Few,  if  any,  export  managers 
are  able  prophets  in  this  direction.  Their  whole  training  hardly 
includes  a  moment's  study  of  value  in  such  prophecy.  The 
credit  man,  on  the  other  hand,  must  be  a  prophet.  It  is  not 
enough  for  him  to  know  that  a  credit  risk  is  sound  at  the  time  the 


THE  FOREIGN  CREDIT  MAN  AS  A  MERCHANDISER    369 

order  is  shipped.  The  credit  man  must  decide  whether  or  not 
the  importer  will  be  good  months  later  after  the  goods  have 
reached  him  and  the  maturity  date  of  the  o})ligation  has  been 
reached. 

In  consequence,  the  credit  man  has  long  since  learned  that  a 
financial  statement  of  an  importer  is  far  more  than  a  mere  proof 
of  temporary  solvency.  The  relation  of  assets  to  liabilities,  the 
proportion  of  accounts  outstanding  to  capital  invested,  the 
amount  of  stock  on  hand  compared  to  annual  sales — all  these 
supply  evidence  of  sound  management,  or  the  reverse.  Given 
two  annual  statements — and  these  are  generally  available,  the 
good  credit  man  can  gauge  even  more  accurately  the  future  of  the 
risk. 

How  the  Future  Can  Be  Predicted. — With  two  such  statements 
before  him  the  credit  man  notes  not  alone  the  comparison  in 
sales,  but  many  other  even  more  important  elements.  For 
example,  even  if  sales  have  increased  in  the  second  year,  there  is  a 
danger  sign  if  the  accounts  outstanding  have  increased  all  out  of 
proportion  to  the  increased  sales.  It  is  particularly  valuable 
information  if  the  importer  is  shown  to  be  increasing  revenue, 
stocks  and  sales  while  reducing  the  percentage  of  accounts  due. 

Capitalization  of  Goodwill  Rule. — The  nature  of  the  assets 
is  also  of  vital  importance.  The  rule  of  holding  goodwill  down 
to  a  capitalization  which  would  allow  10  per  cent  to  be  earned 
is  the  easy  informal  test  of  the  intangibles.  Many  export  credit 
managers  feel  that  the  rule  is  by  no  means  final,  but  all  agree 
that  it  at  least  is  a  simple  way  of  checking  extravagant  claims  for 
goodwill. 

COOPERATION  BETWEEN  EXPORT  SALES  AND  CREDIT 
DEPARTMENTS 

A  cooperative  method  by  which  the  export  manager  obtains 
the  full  merchandising  skill  of  the  credit  man  and  the  export 
credit  man  receives  the  full  benefit  of  the  credit  sense  of  the 
export  manager  is  worth  careful  study. 

When  an  initial  order  arrives  from  a  dealer  in  any  part  of  the 
world  who  has  never  imported  before  from  any  country,  the 
export  sales  department  sends  to  the  credit  man  a  wealth  of 
data.  This  is  possible  because  this  manufacturing  exporter 
believes  that  the  time  to  get  credit  data  is  before  and  not  after 
an  order  is  received. 

24 


370  EXPORT  MERCHANDISING 

Proper  Methods  in  Securing  Advance  Data. — Credit  investiga- 
tion starts  through  four  and  sometimes  six  different  channels  the 
day  a  letter  arrives  asking  for  prices.  If  the  sales  department's 
reply  to  the  inquiry  brings  back  an  order  by  return  mail  the 
same  steamer  will  also  bring  up-to-date  credit  information.  The 
second  reason  is  well  worth  remembering.  If  the  credit  data 
arrives  without  an  order  in  the  same  mail,  the  export  sales  depart- 
ment studies  to  see  the  best  way  to  follow  up  the  original  quo- 
tation. The  credit  man  is  called  into  conference  to  interpret 
the  credit  reports  and  to  set  a  tentative  credit  limit,  so  that 
the  sales  department  may  have  a  definite  target. 

Where  the  Credit  Man  Can  Help. — After  the  conference,  the 
case  of  the  importer  is  analyzed  carefully.  His  original  inquiry 
and  the  sales  reply  are  checked  against  the  newly  acquired  facts. 
Need  of  representation  is  carefully  weighed.  The  general  sales 
policy  for  the  country  from  which  the  inquiry  comes  is  held  up 
for  inspection.  Then  a  definite  plan  of  sales  attack  is  drawn  up 
and  recorded  and  the  prospect  turned  over  to  the  export  sales 
correspondents  to  sell. 

Collating  Credit  Data  by  Export  Department. — The  credit 
reports  and  letters  from  any  references  given  in  such  cases  are 
held  as  sales  material  until  the  order  is  secured.  Then  they  are 
attached  to  the  order  and  sent  to  the  credit  man  with  a  brief 
statement  of  the  sales  needs  in  the  territory  involved,  the  local 
agent's  name,  if  any,  and  the  presence  or  absence  of  good  cus- 
tomers who  might  well  take  over  the  goods  in  case  draft  was  not 
accepted.  This  last  point  is  an  important  one  from  the  stand- 
point of  the  credit  man  willing  to  lose  now  and  then  in  a  good 
cause,  but  naturally  deserving  all  possible  protection. 

Sizing  up  New  Accounts. — The  good  credit  man  will  often 
come  to  the  export  manager  and  point  out  that  some  new  account 
should  really  order  in  far  larger  quantities  and  in  wider  variety 
than  anything  in  the  correspondence  has  indicated.  Or  he  may 
suggest  some  particularly  active,  able  and  well-off  importer  as  an 
agent. 

Examples  such  as  these  can  be  multiplied.  The  merchandising 
ability  of  the  credit  man  is  too  valuable  an  asset  for  any  exporter 
to  overlook. 


CHAPTER  XXXIV 

SOURCES  OF  INFORMATION  ON  FOREIGN  CREDIT 

RISKS 

"There  is  no  merchant  so  small  or  market  so  remote  that  reliable 
credit  data  cannot  be  secured  on  which  to  base  the  granting  or 
refusal  of  the  extension  of  credit." — Amos  Weatherbee. 

Mercantile  Agencies  Used  in  Domestic  Credits  Have  Foreign  Trade  Depart- 
ments. Nature  oj  Reports  Supplied  by  Mercantile  Agencies.  Credit  Bureaus 
of  National  Association  of  Manufacturers  and  Philadelphia  Commercial 
Museum.  Credit  Service  Possible  to  Members  of  Export  Organizations.  The 
American  Manufacturers'  Export  Association.  Boston  Export  Round  Table. 
Reports  Supplied  by  Export  Journals.  Service  Bureaus  of  American  Banks. 
Credit  Agencies  Abroad.  Credit  Data  Secured  by  Export  Salesman  and 
Agents.  Value  of  References.  Workings  of  Foreign  Credit  Interchange 
Bureau  of  National  Association  of  Credit  Men.  Details  of  Its  Operation. 
Exposition  of  Its  Advantages.  Credit  Data  Obtainable  from  Trade  Organiza- 
tions and  Private  Sources. 

Mercantile  Agencies. — Obviously,  the  leading  sources  of  for- 
eign credit  information  should  be  known  to  every  manufacturer 
who  even  contemplates  sales  overseas.  The  first  source  is  the 
mercantile  agency.  R.  G.  Dun  &  Co.  have  a  complete  export 
organization  with  thousands  of  correspondents,  as  well  as  their 
own  branches  abroad.  Their  regular  foreign  credit  reports  are 
very  similar  to  their  domestic  reports — sometimes  called  special 
reports,  as  they  are  obtainable  only  on  application.  These 
reports  are  most  valuable  when  they  include  the  financial  state- 
ment of  the  importer,  showing  the  usual  "capital  invested," 
"accounts  outstanding" — all  the  usual  items  which  make  up  a 
statement  of  liabilities  and  assets  here  at  home.  The  usual 
record  of  local  credit,  insurance,  when  carried,  and  fire  losses  is 
expanded  to  include  in  many  cases  opinions  on  the  attention  given 
by  the  "risk"  to  his  international  obligations.  In  a  similar 
way,  Bradstreet's  offer  a  type  of  service  based  upon  domestic 
standards  and  specializing  on  spheres  of  activity  in  a  smaller 
circle  than  the  world-wide  service  of  the  Dun  organization. 

Cooperative  Organizations. — The  National  Association  of 
Manufacturers  is  the  outstanding  source  of  specific  information 

371 


372  EXPORT  MERCHANDISING 

on  import(>rs  from  the  angle  of  the  cooperative  organization. 
With  its  thousands  of  correspondents  in  small  as  well  as  large 
markets  the  "N.  A.  M." — as  it  is  commonly  known — offers  a 
particularly  valuable  aid  to  the  credit  man  l)y  seeking  with  a  high 
degree  of  success  to  include  in  a  single  credit  report  the  informa- 
tion gathered  by  three  different  correspondents  entirely  unknown 
to  each  other,  and  each  viewing  the  risk  from  his  own  professional 
angle.  The  reports  of  the  National  Association  of  Manufacturers 
each  year  contain  a  higher  per  cent  of  financial  statements  made 
at  their  special  request.  In  this  connection,  both  R.  G.  Dun  & 
Co.  and  the  National  Association  of  Manufacturers  deserve  the 
hearty  thanks  of  the  exporters  of  the  United  States  for  their 
tactful,  persistent  efforts  which  have  pointed  out  to  importers 
abroad  the  worth  to  them  of  carefully-prepared  annual  state- 
ments. 

Semi-public  Institutions. — In  the  field  of  semi-public  organiza- 
tions the  Philadelphia  Commercial  Museum  offers  foreign  credit 
service  to  its  members  based  upon  reports  made  by  its  correspond- 
ents scattered  all  over  the  world.  These  reports  include  the 
opinions  of  the  correspondents  upon  importers,  together  with  a 
business  history  of  these  importers.  These  reports  do  not,  as  a 
rule,  include  the  financial  statements  of  the  importers.  They 
contain  many  most  valuable  pieces  of  credit  information  often 
unobtainable  in  reports  from  other  sources. 

National  Export  Organizations.^ — ^The  American  Manufacturers' 
Export  Association  has  in  recent  years  developed  more  and  more 
its  file  of  credit  reports,  and  will  soon  have,  if  present  activities  are 
a  correct  indication  of  the  future,  a  service  of  merit  and  value 
because  based  on  reports  from  abroad  which  will  not  duplicate 
the  work  of  correspondents  of  other  organizations. 

The  Export  Managers  Club  of  New  York. — The  Export  Man- 
agers Club  of  New  York  is  entitled  to  decided  recognition  in  the 
field  of  foreign  credits.  It  originated  the  standard  form  for  ex- 
change of  information  between  domestic  grantors  of  foreign  credits. 
This  form  was  adopted  nationally  by  the  National  Association 
of  Credit  Men.  Its  members  exchange  credit  information  with 
especial  emphasis  upon  the  agency  field. 

The  Boston  Export  Round  Table. — The  Boston  Export  Round 
Table  confines  its  activities  in  the  foreign  credit  field  to  educa- 
tional work  in  cooperation  with  existing  organizations  of  credit 
and  export  men.     Through  its  chain  of  "foreign  finance  advisors" 


INFORMATION  ON  FOREIGN  CREDIT  RISKS  373 

— the  leading  international  bankers  in  many  large  cities  overseas 
which  have  extensive  import  interests — it  possesses  an  unique 
means  to  solve  the  larger  problems  through  the  personal  influence 
and  knowledge  of  men  of  long  experience  and  vast  knowledge  in 
international  financial  transactions.  It  holds  the  international 
record  for  attendance  at  its  Foreign  Credit  Conferences  in  1918 — 
more  than  one  thousand  attending  its  sessions. 

Credit  Services  of  Export  Journals. — The  leading  export 
journals  published  in  this  country  for  circulation  abroad  have 
their  own  foreign  credit  sections.  Often  reports  not  available 
in  the  fields  of  any  other  source  of  foreign  credit  data  will  be 
found  in  their  files  This  is  particularly  true  in  cases  of  mer- 
chants abroad  importing  only  once  before  from  the  United  States. 
As  the  previous  transaction  in  many  such  cases  arose  from  an 
advertisement  in  their  columns,  and  the  original  and  only 
credit  report  sought  was  through  the  particular  export  journal 
involved,  it  alone  is  often  found  with  credit  data  on  hand  as 
the  merchant  abroad  extends  his  importations  from  this 
country. 

Banks  as  Sources  of  Credit  Data. — American  financial  institu- 
tions have  in  recent  years  given  great  attention  to  foreign  bank- 
ing, particularly  those  with  their  own  branches  or  direct  exclusive 
connections  abroad.  It  is  entirely  natural  that  they  now  offer 
a  certain  type  of  combined  business  history  and  vicarious  ledger 
experience.  These  bank  reports  range  from  most  complete 
information  to  gossip  as  to  the  business  and  personal  morals  of  the 
importer.  Their  value  depends  largely  on  the  extent  in  any 
individual  case  they  supplement  rather  than  duplicate  reports 
from  other  sources.  In  this  connection  it  is  important  to 
recognize  and  value  the  fact  that  the  favorable  report  from 
a  bank  abroad  is  a  sober  judgment  of  an  experienced  financier. 
While  it  may  have  the  weakness  of  being  the  opinion  of  a  third 
party,  it  has  the  strength  of  frankness  and  it  is  seldom,  if  ever, 
tinged  with  favoritism  because  the  risk  is  a  depositor. 

American  Manufacturers  Foreign  Credit  Insurance  Ex- 
change.— Insurance  against  insolvency  of  importers  abroad  has 
developed  a  new  source  of  semi-credit  information.  The 
American  Manufacturers  Foreign  Credit  Insurance  Exchange — 
which  is  partly  a  private,  partly  a  mutual  enterprise — has 
compiled  directories  of  importers  abroad  and  "rated"  these 
importers  by  symbols  which  indicate  indirectly  the  desirability 


374  EXPORT  MERCHANDISING 

of  each  as  a  customer.  These  valuable  reference  books  are 
designed  to  be  used  for  sales,  credit  and  insurance  purposes. 

Credit  Agencies  Overseas.^ — In  addition  to  these  four  sources 
of  credit  information  in  the  United  States,  there  are  mercantile 
credit  agencies  abroad.  These,  particularly  in  Europe  and 
Argentina,  are  very  helpful  and  their  cost  of  service  not  at  all 
high,  if  reports  are  contracted  for  in  moderate  quantities. 
Naturally,  it  will  be  some  years  before  European  credit  agency 
files  as  a  whole  can  attain  the  excellence  of  pre-war  days.  But, 
conversely,  these  European  agencies  have  every  incentive  to 
bring  reports  up  to  date  rapidly  and  their  closeness  to  their 
chosen  field  certainly  gives  the  opportunity  for  rendering  a  real 
service. 

The  Export  Salesman  and  the  Export  Agent. — The  export 
salesman  in  the  field  and  the  export  agent  abroad  should  be 
made  sources  of  first-hand  credit  information  within  the  manifest 
limitations  of  their  abilities  and  opportunities.  The  good  sales- 
man can  frequently  decide  accurately  in  regard  to  the  capability 
of  the  importer  and  to  the  general  appearance  and  upkeep  of  his 
establishment.  The  export  agent  abroad  frequently  has  the 
opportunity  to  keep  in  constant  touch  with  the  foreign  merchant's 
local  credit  reputation,  his  commercial  honesty  and  acumen  and 
his  relative  standing,  year  by  year,  in  comparison  with  his 
competitors. 

But  the  export  salesman  and  the  export  agent  abroad  should 
not  be  left  to  their  own  initiative  in  the  important  matter  of 
credits  and  credit  reports.  The  foreign  credit  manager  should, 
by  cooperative  training,  aid  these  important  assistants  to  come 
to  their  full  usefulness  and  value  to  the  enterprise  they  represent. 

The  Value  of  References. — References  are  a  highly  important 
source  of  information.  These  are  frequently  given  on  the 
importer's  letterhead  as  a  matter  of  form.  In  other  cases  they 
are  easily  ascertained  from  the  letterhead,  which  not  infrequently 
shows  lists  of  agencies  held  by  the  importer  or  of  products 
featured.  In  pleasingly  increasing  numbers  importers  are  includ- 
ing their  references  in  their  letters  of  inquiry. 

THE  FOREIGN  CREDIT  INTERCHANGE  BUREAU  OF  THE 
NATIONAL  ASSOCIATION  OF  CREDIT  MEN 

The  most  recent  and  by  far  the  most  important  development 
in  the  field  of  foreign  credits  is  the  work  of  the  National  Associa- 


INFORMATION  ON  FOREIGN  CREDIT  RISKS  375 

tion  of  Credit  Men.  There  has  been  many  years'  quiet  develop- 
ment of  the  idea,  originally  started  by  an  informal  and  small 
group  of  export  executives  and  the  credit  men  of  their  enter- 
prises. It  is  now  the  Foreign  Credit  Interchange  Bureau  of  the 
National  Association  of  Credit  Men.  Its  members  work  in 
closest  harmony  by  depositing  in  a  manner  given  full  protection 
the  entire  list  of  their  foreign  accounts.  This  is  built  into  a 
geographical,  alphabetical  list  of  importers  abroad.  On  the 
individual  card  of  each  importer  there  is  coded  the  exporters  who 
have  sold  or  are  selling  this  particular  importer. 

Its  International  Ledger.^ — This  remarkable  system  of  the 
National  Association  of  Credit  Men  thus  gives  each  contributing 
member,  on  request,  the  complete  and  collated  ledger  and  sales 
experience  of  all  other  members.  By  an  ingenious  plan,  each 
member  voluntarily  supplying  credit  data  on  a  risk  automatically 
receives  fresh  data  as  soon  as  it  is  supplied  by  any  other  member. 
This  makes  competition  for  supplying  information  both  keen  and 
mutually  profitable.  The  Foreign  Credit  Interchange  Bureau 
of  the  National  Association  of  Credit  Men  also  provides  a  central 
bureau  for  the  listing  of  importers  undesirable  from  any  credit 
or  sales  reason.  This  one  feature,  with  the  educational  work 
planned,  may  well  do  more  to  eliminate  petty  unjust  claims  than 
all  the  earnest  individual  and  semi-cooperative  effort  in  the  last 
generation.  This  Bureau  is  governed  by  directors  chosen  from 
the  leading  credit  men  in  active  business.  In  addition  to  credit 
men,  there  is  also  an  informal  advisory  board  of  export  executives, 
including  the  highest  officials  of  purely  export  merchandisers' 
organizations. 

Other  Sources  of  Credit  Information. — This  array  of  sources  of 
export  credit  data  is  by  no  means  inclusive.  Large  forwarders  of 
foreign  freight  offer  a  distinct  type  of  credit  information  secured 
through  their  extensive  connections  abroad.  Organizations 
both  private  and  cooperative,  devoted  to  the  betterment  of 
commercial  relations  between  the  United  States  and  their 
particular  part  of  the  world,  are  anxious  that  only  rehable 
importers  become  purchasers  from  the  United  States.  Various 
chambers  of  commerce  abroad,  entirely  or  partly  American  in 
their  directorate,  each  year  add  to  credit  data  facilities  either  by 
individual  reports  or  by  lists  or  directories,  in  which  are  included 
only  importers  of  proper  standing. 

The  Chamber  of  Commerce  of  the  United  States,  through  its 


37G  EXPORT  MERCHANDISING 

Foreign  Commerce  Department,  offers  service  which  is  of 
exceptional  value  to  the  importer  who  extends  credit  overseas; 
Without  attempt  to  build  up  a  staff  service  covering-  foreign 
credits,  it  has  answered  a  multitude  of  questions  involving  not 
only  credits,  but  also  the  kindred  topic  of  foreign  financing.  It  is 
not  out  of  place  to  credit  the  Foreign  Commerce  Department  of 
the  Chamber  of  Commerce  of  the  United  States  with  an  unusual 
grasp  of  the  inevitable  problems  in  foreign  trade.  Its  manager 
and  staff  are  familiar  with  export  and  import  practices,  sta- 
tistics and  new  developments.  Its  keynote,  "Helping  the  mem- 
bers to  help  themselves,"  is  constructive  in  every  sense  of  the 
word. 

The  Pan  American  Union  is  an  official  association  of  twenty-one 
American  republics.  Since  its  purpose  includes  the  develop- 
ment of  closer  commercial  relations  between  the  Republics  of 
the  American  Continent,  it  naturally  serves  exporters  in  the 
United  States.  While  it  does  not  maintain  a  department  of 
foreign  credits,  it  supplies  special  data  by  countries  which  is  of 
great  value  to  the  foreign  credit  manager,  and  its  staff,  through 
its  carefully  gathered  information,  will  often  aid  materially  in 
the  solving  of  foreign  credit  problems.  The  Columbus  Memorial 
Library  can  boast  50,000  volumes  relating  to  the  American 
Republics.     It  can  be  consulted  without  charge. 

Beyond  this  additional  group  there  will  be  found  in  many 
countries,  national  organizations  with  a  foreign  trade  com- 
mittee which  has  developed  files  of  credit  data  on  importers 
particularly  interested  in  the  products  of  the  industry.  Today 
we  are  on  the  verge  of  an  era  in  which  there  will  be  individual 
foreign  credit  experts  who  will  confine  their  entire  activities  to 
the  capacity  of  "Counsellor  to  Foreign  Credit  Departments." 

For  in  no  one  way  can  the  credit  man  and  his  merchandising 
associates  better  serve  this  country  of  ours  than  in  development 
of  the  right  volume  of  the  right  kind  of  exports — a  volume  which 
will  balance,  protect  and  insure  our  domestic  financial  stability. 


CHAPTER  XXXV 
ELEMENTS  OF  FOREIGN  COLLECTIONS 

"The  tree  tliat  bears  tlie  fruit  must  not  be  damaged  in  gathering 
the  crop." — T.  J.  Wright. 

Principles  Underlying  Sound  Foreign  Collections.  The  Collection  Process 
Should  be  Educational.  Many  Delayed  Collections  Due  to  American  Ignorance 
of  Mutual  Advantages  of  Time  Documentary  Draft  Procedure.  Foreign 
Collection  Letters  Should  Be  Sales  Letters.  The  Three  Purposes  of  aCollection 
Letter.  Use  of  Clean  Drafts  in  Collections.  Problems  Inherent  in  Collections 
Based  upon  Failures  to  Pay  Documentary  Drafts  at  Maturity.  Reason  for 
Non-payment  Tremendously  Important.  Examples  of  Collections  in  Connec- 
tion with  Documentary  Drafts.  Collection  Arguments  that  Appeal  to  Foreign 
Buyers.     Specimen  Collection  Letters. 

The  primary  consideration  in  foreign  collection,s  must  be  that 
of  retaining  the  customer.  The  foreign  collection  department 
that  collects  one  hundred  cents  for  every  dollar  of  overdue  foreign 
accounts  may  well  be  a  most  costly  luxury. 

The  Educational  Function  of  Collections. — The  collection 
process  should  be  an  educational  process.  It  should  retain 
every  desirable  account  and  retain  it  with  self-respect.  It 
should  retain  the  great  majority  of  accounts  which  are  desirable 
except  for  their  failure  to  appreciate  the  value  of  payments  at 
maturity,  and  it  should  educate  this  class  to  a  point  where  it 
pays  promptly  because  it  sees  that  it  is  to  its  own  interest  to  pay 
promptly. 

Who  Is  at  Fault? — It  should  always  be  borne  in  mind  that  the 
great  majority  of  foreign  collections  are  the  direct  result  of 
American  ignorance  and  faulty  methods  in  exporting.  Because 
of  the  general  ignorance  of  documentary  draft  usage  and  of  its 
advantages,  American  manufacturers  have  created  in  Cuba,  in 
Porto  Rico,  in  Mexico  and  in  other  countries  an  entirely 
unnecessary  number  of  open  accounts.  This  has  not  been  done 
for  any  valid  reason  but  merely  because  the  novice  offered  his 
usual  "payment  to  be  made  within  sixty  days  from  date  of 
invoice"  terms,  not  knowing  of  the  usual  and  better  methods 
customarily  employed  in  foreign  trade  the  world  over. 

377 


37S  EXPORT  MERCHANDISING 

Naturally,  these  terms  without  an  accepted  maturity  date 
breed  looseness  in  method  by  the  importer  to  whom  they  are 
offered.  One  of  the  greatest  Amori(!an  offenders  years  ago,  is 
now  engaged  in  solving  the  problem  of  shifting  his  accounts  over 
to  documentary  time  sight  draft  terms  and,  like  others  who 
have  engaged  in  the  interesting  task,  is  having  better  fortune 
than  he  truly  deserves. 

Correspondence  and  Collections. — Foreign  collection  letters 
should  be  sales  letters.     They  should  sell  three  distinct  ideas: 

1.  Payment  of  the  amount  overdue 

2.  Payment  of  future  invoices  when  due 

3.  Purchase  of  definite  and  further  merchandise. 

To  accomplish  this  triple  purpose,  the  writer  of  export  collection 
letters  should  be  in  close  touch  and  in  entire  sympathy  with  the 
export  sales  policies  of  his  enterprise.  He  should  be  enough  of  a 
salesman  so  that  he  can  point  out  the  profits  which  the  buyer 
will  lose  if,  by  severance  of  relations,  he  becomes  unable  to 
secure  further  supplies  of  the  article  to  which  his  customers 
have  given  their  approval.  He  must  be  able  to  sell  the  customer 
the  advantages  he  gains  by  prompt  payment  because  of  his 
greater  desirability  because  of  his  trade  outlet.  He  must  be 
able  to  create  desire  in  the  mind  of  the  customer  for  definite 
merchandise  which  the  importer  can  see  he  cannot  purchase 
until  his  overdue  indebtedness  is  cancelled. 

Use  of  the  Clean  Draft. — Inferior  as  the  "clean"  or  "non- 
documentary"  draft  is  compared  to  the  documentary  draft,  it 
should  be  used  in  connection  with  open  accounts.  Its  use  is, 
to  be  sure,  in  a  sense  irregular,  but  that  merely  makes  the 
explanation  a  bit  more  difficult.  It  can  be  explained,  however, 
that  it  is  used  at  the  request  of  those  purchasing  on  open  accounts 
to  bring  their  attention  to  the  maturity  of  obligations,  and  hence 
is  used  in  the  individual  instance  involved. 

It  is  a  mark  of  the  experienced  exporter  in  many  lines  and  in 
many  markets  to  draw  such  drafts  at  "three  days"  or  preferably 
at  "seven  days"  sight  rather  than  "at  sight."  This  few  days' 
notice  is  not  only  a  courtesy  which  takes  the  raw  edge  off  this 
demand  for  payment,  but  it  may  well  be  a  real  convenience  to 
the  importer  by  enabling  him  better  to  adjust  his  finances  before 
finally  called  upon  for  payment. 

Serious  Nature  of  Non-paid  Documentary  Drafts. — The 
treatment  of  importers  who  fail  to  pay  documentary  drafts  at 


ELEMENTS  OF  FOREIGN  COLLECTIONS  379 

maturity  is  an  entirely  different  problem  from  the  treatment  of 
importers  who  have  wrongly  been  educated  to  the  use  of  open 
account  payments.  Because  of  the  odium  which  attaches  to 
the  man  who  fails  to  pay  his  documentary  drafts  when  due,  it  is 
always  safe  to  assume  that  it  is  not  carelessness,  caprice  or  whim 
that  is  responsible  for  non-payment.  This  correct  analysis  of  a 
difficult  situation  leaves  but  two  phases  of  the  non-payment  as 
probable.  The  first  is  some  grave  fault  of  the  exporter  or  his 
agents.     The  second  is  some  grave  fault  of  the  importer. 

It  has  been  difficult  to  secure  from  the  foreign  correspondents 
of  American  banks  full  reports  which  gave  the  reason  for  the 
refusal  of  the  importer  to  pay  at  maturity.  This  condition, 
happily,  is  being  remedied  by  an  international  committee  which 
is  seeking  ways  and  means  to  bring  about  improvement  in 
cooperation  between  banks,  exporters  and  importers  and  to 
standardize  international  banking  forms  and  practices.  When 
the  refusal  of  payment  made  on  an  accepted  documentary  draft 
is  accompanied  by  even  the  slightest  of  explanations  the  problem 
is  greatly  simplified.  The  truth,  half-truth  or  utter  falsity  of  the 
excuse  will  in  itself  be  a  guide  to  the  collection  effort.  If  the 
customer,  for  example,  claims  concealed  damage,  payment  of 
the  undisputed  remainder  pending  investigation  and  possibly 
adjustment  is  an  obvious  step. 

What  to  Do  When  Reason  for  Non-payment  Is  Unknown. — 
The  real  problems  are  those  in  which  no  explanation  of  the  reason 
for  non-payment  is  given.  In  these  cases  it  is  considered  the 
best  practice  to  assume  that  the  non-payment  is  due  to  a  grave 
fault  on  the  part  of  the  exporter  and  to  ask  by  cable  or  mail  for 
an  explanation  of  the  fault.  This  step  is  least  dangerous  because 
in  case  the  refused  payment  had  behind  it  a  valid  reason,  the 
exporter  has  not  further  offended  an  already  offended  customer. 
The  good  credit  man  looks  most  closely  into  all  evidence  when 
an  accepted  draft  is  not  paid  at  maturity.  Very  often  this 
evidence  (which  includes  ledger  experience  as  well  as  agency  and 
other  reports)  will  indicate  the  probabilities  and,  by  such  an 
indication,  make  the  collection  method  to  be  used  almost  certain 
to  be  the  right  one. 

"Honest  men  do  not  turn  into  crooks  over  night,"  is  a  maxim 
which  one  credit->man  keeps  before  him.  "Coming  events  cast 
their  shadows  before  them,"  is  another  truism  well  worth 
remembering.     Cases   abound   where   the  good  credit  man  has 


380  EXPORT  MERCHANDISING 

saved  valuable  accounts  merely  by  insisting  that  the  evidence 
in  favor  of  the  customer  was  enough  to  offset  the  fact  of  the 
refused  payment. 

COLLECTION  ANALYSIS  AND  CORRESPONDENCE 

As  an  illustration,  a  New  York  manufacturer  made  a  shipment 
to  a  Central  American  republic  on  60-day  documentary  sight 
draft  terms.  The  draft  was  accepted.  When  payment  was  due 
it  was  refused.  These  bare  facts  were  reported  to  the  exporter. 
The  credit  man  analyzed  the  history  of  the  importer  and  felt 
certain  that  there  was  some  good  reason  for  non-payment.  All 
details  of  invoicing  and  shipment  were  checked  and  found  correct. 
The  collection  department  was  not  given  the  account  but  the 
foreign  credits  manager  wrote  direct  to  the  account  asking  what 
error  had  been  committed  of  so  serious  a  nature  as  to  justify 
non-payment.  His  letter  was  free  from  all  except  the  kindliest 
of  spirit. 

That  letter  saved  an  account.  The  bank  in  the  Central 
American  republic  had  a  criminally  careless  employee  who  pre- 
sented the  draft  notice  of  payment  due  on  the  morning  following 
a  midnight  fire  that  damaged  severely  the  importer's  establish- 
ment. The  distracted  proprietor  asked  him  to  call  later  in  the 
day.  The  bank's  employee,  either  from  pique  or  laziness,  did 
not  report  this  request  but  did  report  the  importer's  refusal  to 
pay.  As  the  fire  destroyed  the  importer's  records  and  no  further 
effort  was  made  by  the  bank,  it  was  not  unnatural  for  the 
importer  to  forget  the  episode — and  with  it  forget  the  payment  due 
and  overdue. 

The  best  way  is  to  anticipate  the  unusual  as  well  as  the  usual. 
The  exporter  should  in  every  case  at  the  time  he  turns  over  drafts 
for  collection  instruct  the  bank  exactly  what  he  wishes  it  to  do  in 
case  of  non-payment. 

The  standard  forms  which  will  soon  be  available  will  make  this 
a  simple  task  and  be  in  themselves  a  reminder  of  the  wisdom  of 
this  course. 


ELEMENTS  OF  FOREIGN  COLLECTIONS  381 

COLLECTION  ARGUMENTS  THAT  APPEAL  TO  FOREIGN 
BUYERS 

"Let  every  letter  show  a  clear  recognition  of  the  reader's  equality 
with  you." — George  Burton  Hotchkiss. 

Collection  Keynotes. — The  keynote  of  the  collection  letter 
should  be  based  on  individuality.  It  should  be  the  result  of 
painstaking  diagnosis  of  the  customer  involved  and  of  the 
reasons  behind  the  failure  to  pay. 

The  secondary  consideration  is  the  type  of  argument  that  will 
appeal  to  the  particular  debtor.  There  are  a  few  broad  appeals 
which  have  a  racial  rather  than  a  logical  base.  It  is  wise  to 
know  these  broad  appeals  so  that  the  correctness  of  diagnosis 
may  yield  its  full  value  in  the  treatment. 

The  appeal  to  the  honor  of  a  Latin  is  the  one  broad  appeal  that 
will  strike  a  responsive  chord  in  the  breast  of  all  except  the  most 
calloused  of  business  sinners.  No  collection  letter  should  be 
written  to  any  customer  of  Latin  race  without  this  fact  well  in 
mind.  It  is  a  dangerous  appeal  only  when  unskilfully  used.  To 
show  clearly  what  an  appeal  exists,  what  heights  to  which  Latins 
rise  in  protection  of  honor,  a  single  case  is  cited  here.  It  is 
taken  from  the  history  of  an  Ohio  manufacturer.  The  scene  is 
laid  in  a  small  town  in  Bolivia. 

Honor  as  a  Collection  Factor. — It  was  with  surprise  that  the 
export  sales  manager  found  a  remittance  of  several  hundred 
dollars  pinned  to  a  letter  from  a  physician  in  this  small  town,  since 
his  product  was  sold  only  through  the  hardware  trade.  The 
name  was  not  known  to  him  and  there  was  no  order  in  or  attached 
to  the  letter,  which  was  in  Spanish. 

When  translated  it  read : 

"I  am  attaching  a  money  order  for  $365.67,  in  payment  of  your 

invoice  of  June  8  to .     This 

man  is  dishonest,  as  j^ou  will  see  from  a  letter  the Bank  is 

writing  you  at  my  request.  When  I  learned  from  my  son  in  the  Customs 
House  that  you  had  innocently  made  a  shipment  to  this  dishonest  man, 

in  order  to  protect  the  fair  name  of  our  city  I  asked  the 

Bank,  through  whom  your  draft  was  drawn,  to  permit  me  to  pay  it 
and  receive  the  goods.  This  they  allowed  because  of  the  bad  reputation 
of  the  man.  Doubtless  you  have  in  your  city  dishonest  men — a  few — ■ 
and  so  you  will  not  hold  it  against  us  in  this  case.  While  I  am  a  phy- 
sician and  not  engaged  in  re-sale  of  merchandise,  I  have  your  shipment 
at  my  domicile  and  doubtless  will  place  without  loss  in  the  hands  of 
one  of  our  reputable  merchants  who  will  appreciate  their  quality  and 
then  deal  direct  with  you." 


382  EXPORT  MERCHANDISING 

Coinincnt  would  be  superfluous! 

British  and  Colonial  Preferences. — In  the  British  Empire  and 
with  English-speaking  merchants  the  world  over,  the  strongest 
broad  appeal  is  that  of  the  unwisdom  of  irregularity  of  practice 
in  business.  Particularly  is  the  English  merchant  and  his  breth- 
ren in  Australia,  New  Zealand,  South  Africa  and  India  most 
loath  to  act  in  an  "  unbusiness-like  "  or  "  irregular  "  way.  There- 
fore, the  skilled  writer  of  collection  letters  will  often  point  out  the 
correctness  of  the  handling  of  the  order  by  the  exporter  and  by 
inference  or  statement  contrast  it  with  the  "most  unbusiness-like  " 
action  on  the  part  of  the  importer. 

The  export  sales  manager  can  often  be  of  real  service  to  the 
export  collection  department.  It  is  a  poor  export  manager  who 
does  not  come  to  have  some  standing,  some  acquaintance  and 
some  intimacy  with  his  foreign  customers.  This  fact  makes  it 
possible  and  natural  for  the  export  sales  manager  to  write  personal 
letters  asking  the  reason  for  non-payment  and  pointing  out  the 
embarrassment  it  causes  him  to  be  called  upon  for  an  explanation 
of  such  an  action  on  the  part  of  a  friend. 

The  Intimate  Touch. — These  personal  letters  will  often  bring 
out  facts  which  the  more  formal  "house  correspondence"  does 
not  evoke.  Hidden — long  hidden — resentment  at  fancied  or 
real  injury;  confidential  news  of  defalcation  and  consequent 
temporary  difficulties;  failing  mental  powers  of  the  nominal  head 
of  the  importer's  business — these  are  a  few  of  the  results  of  such 
letters.  And  each  made  easy  the  decision  as  to  what  should  be 
the  attitude  towards  the  debtor. 

In  the  technique  of  collections  of  documentary  drafts  not  paid 
at  maturity  there  is  a  distinct  place  for  the  use  of  a  "clean"  or 
"non-documentary"  draft.  This  seeming  absurdity — for  on  the 
face  it  seems  childlike  to  believe  that  a  clean  draft  will  succeed  in 
a  collection  when  a  documentary  draft  has  failed — is  often  the 
right  step.  Following  non-payment  of  the  documentary  draft 
when  the  reason  given  is,  for  example,  certain  goods  included  in 
error,  a  clean  draft  for  the  undisputed  remainder  is  as  correct 
technique  as  the  original  documentary  draft.  The  clean  draft 
can  properly  be  used  in  collections  whenever  the  misunderstand- 
ing which  caused  the  original  non-payment  has  been  cleared  up 
and  there  is  reason  to  believe  that  payment  will  follow  presen- 
tation of  any  draft. 

Facilities    of    Export    Organizations.— In    addition    to    these 


ELEMENTS  OF  FOREIGN  COLLECTIONS  383 

individual  attempts  at  collection,  several  of  the  export  organiza- 
tions offer  facilities  for  collection  of  overdue  foreign  accounts. 
Collection  efforts  through  recourse  to  law  are  always  possible,  and 
while  they  constitute  a  last  resort,  there  is  no  reason  why  legal 
aid  should  not  be  enlisted  when  the  amounts  involved  and  cir- 
cumstances which  surround  the  collection  make  other  methods 
merely  a  waste  of  time.  In  fact,  in  dealing  with  certain  doubtful 
credit  risks  it  is  the  part  of  wisdom  to  issue  advance  instructions 
to  the  bank  to  place  the  matter  in  the  hands  of  their  chosen 
attorney  in  case  payment  is  not  made  at  maturity. 

There  is  no  one  field  in  export  endeavor  which  offers  such  great 
opportunities  for  the  exercise  of  the  highest  degree  of  constructive 
work,  which  demands  the  greatest  inteUigence  and  judgment,  as 
the  field  of  foreign  credits  and  collections. 

It  is  a  field  for  business  building.  It  is  a  work  without  which 
the  best  of  export  sales  departments  will  fail  in  the  full  accom- 
plishment of  its  desires.  The  good  foreign  finance  manager 
today  is  one  of  the  greatest — if  not  the  greatest — force  in  the 
development  of  the  export  trade  of  the  United  States. 


CHAPTER  XXXVI 
FRAUDULENT  EXPORT  SCHEMES 

"Taking  and  not  giving  is  the  vice  of  the  old  pirate  who  died  at 
the  yard-arm  of  his  own  ship.  If  you  think  that  international  crooks 
succeed,  read  your  history."- — Oren  O.  Gallup. 

Examples  of  Fraudulent  Export  Endeavor.  The  Black  Band.  The  False 
Reference  Plan.  Overseas  Export  Advertising  Criminal  Schemes.  Neces- 
sity for  Investigation  of  Local  Export  Advertising  Offers.  Fraudulent  Export 
Directories.  The  Egyptian  Sight  Draft  Fraud.  The  Defense  against  Similar 
Schemes.  Dangers  in  Selling  at  Low  Export  Prices  Without  Control  of 
Shipments.  The  Pernambuco  Triangle.  The  Pirate  Ship.  A  Judicial 
Attitude  and  Common  Sense  Will  Protect  Adequately  Against  the  Export  Fakir. 

In  every  country  of  the  world  there  is  an  infinitesimal  per- 
centage of  dishonest  men.  In  view  of  the  annual  billions  of 
dollars  to  which  our  foreign  commerce  has  grown,  it  is  amazing 
that  the  international  crook  and  his  fraudulent  schemes  have 
not  reaped  a  far  greater  harvest.  Less  than  a  million  dollars  is 
recorded  as  the  losses  of  American  exporting  manufacturers 
during  the  past  half-century.  It  is  a  tribute  to  the  better  under- 
standing of  American  exporters  that  since  1914  there  are  no 
examples  of  crook  craftsmanship  on  a  wholesale  basis  which 
deserve  to  be  recorded  in  the  interesting  annals  of  international 
crime.  This  is  in  sharp  contrast  to  the  successes  of  the  frau- 
dulently inclined  by  highly  ingenious  forms  of  larceny  and  theft 
which  are  to  the  discredit  of  past  decades. 

THE  BLACK  BAND 

There  is  a  correct  defense  against  every  fraudulent  export 
scheme.  Some  of  the  more  striking  examples  of  the  work  of 
export  crooks,  here  listed  and  analyzed,  emphasize  this  basic 
truth.  The  dishonest  have  victimized  the  exporter  not  alone 
because  of  carefully  planned  frauds  but  also  because  the  exporter 
permitted  himself  to  be  taken  off  his  guard.  This  is  well  proved 
by  the  workings  of  the  Black  Band  which  for  nearly  ten  years 
operated  with  bases  in  the  Mediterranean,  and  directed  their 
efforts  largely  toward  the  securing  of  American  goods  without 

384 


FRAUDULENT  EXPORT  SCHEMES  385 

payment.  This  plan  can  hardly  be  dignified  by  praise  of  the 
technique  employed,  although  probably  in  dollars  and  cents  the 
losses  were  as  great  to  American  exporters  as  those  arising  from 
later  and  more  skilfully  devised  plots.  The  essence  of  the  plan 
was  false  references.  Certainly,  even  making  a  liberal  allow- 
ance for  the  enforced  change  of  names,  no  less  than  a  dozen 
firms  were  directly  and  criminally  involved,  so  that  when  crook 
"A"  placed  an  order  he  was  able  to  give  at  least  half-a-dozen 
references  of  firms  actually  engaged  in  doing  business  in  the  cities 
given  as  their  headquarters,  and  this  half-dozen  usually  had 
some  standing  locally,  particularly  with  the  banks,  in  the  cities 
where  they  were  located. 

Details  of  Fraud.^ — ^The  plan  of  operation  was  simple,  and  suc- 
cessful largely  because  of  its  simplicity.  Using  some  fictitious 
name,  a  member  of  the  Band  would  secure  catalogs  and  prices 
from  a  score  of  standard  American  makers,  usually  selecting 
those  with  little  export  experience  but  manufacturing  a  product 
for  which  a  general  demand  existed.  The  next  step  was  the 
placing  of  orders  ranging  from  as  low  as  $50  to  as  high  as  several 
thousand  dollars,  but  in  no  cases  really  large  orders,  considering 
the  nature  of  the  product  and  the  prices  asked.  The  crook 
specified  sixty  days'  sight  draft  terms,  being  careful  to  make  no 
mention  of  documents  attached,  merely  for  the  reason  that  when 
manufacturers  were  simple  enough  to  want  "clean  drafts" — 
which,  of  course,  were  not  paid — no  one  except  the  maker  and  the 
crook  was  cognizant  of  the  failure  to  pay.  With  each  order, 
carefully  prepared  references  were  given,  together  with  the 
explanation  that  hitherto  the  crook  had  purchased  only  in  Medi- 
terranean countries,  but  because  of  the  wonderful  qualities  of 
the  maker's  products,  and  so  forth,  he  had  decided  to  make  an 
attempt  to  sell  a  higher  grade  line.  The  cupidity  of  the  manu- 
facturer was  appealed  to  by  the  frank  statement  that  the  order 
given  was  merely  to  give  a  fair  trial  to  the  new  articles  and  that 
the  crook  expected  with  confidence  that  succeeding  orders  would 
be  far  larger  in  size. 

An  Adequate  Defence. — It  seems  almost  incredible  today,  but 
it  is  a  fact,  nevertheless,  that  scores  of  American  manufacturers, 
though  common  sense  had  made  them  successful  in  domestic  mar- 
kets, shipped  orders  without  waiting  for  replies  from  references. 
It  seems  incredible  that  scores  more  accepted  the  verbal  reports 
of  unknown  merchants  given  as  references  and  shipped  goods 

25 


386  EXPORT  MERCHANDISING 

and  wrote  letters  urging  further  and  larger  orders.  It  is  not  at 
all  surprising  that  some  more  careful  American  exporters  inves- 
tigated the  references  as  well  as  the  firm  ordering  the  goods,  and 
made  sliipments  on  sixty  days'  sight  draft  attached  to  document 
terms,  when  th(;  r(>f(u'en(;es  indicated  clearly  that  the  references 
given  enjoyed  local  credit  and  a  high  standing  with  local  banks. 
But  even  these  more  careful  firms  should  have  l)een  on  their 
guard  when  they  found  that  in  every  case  the  merchants  given  as 
references  had  been  established  in  their  cities  only  a  very  few 
years,  and  in  many  cases,  particularly  at  the  start  of  the  organized 
campaign  of  the  Black  Band,  only  a  few  months.  This  should 
have  at  least  aroused  suspicion  and  caused  credit  men  to  have 
questioned  their  sources  of  credit  information.  This  would  have 
resulted  in  disclosing  the  fact  that  instead  of  being  signally 
favored  by  orders,  literally  hundreds  of  American  firms  were 
receiving  orders  from  various  alleged  importers  giving  the  same 
references.  Certainly  such  an  amazing  disclosure  would  have 
justified  further  investigations,  and  these  investigations  would, 
of  course,  have  disclosed  the  entire  plan. 

Large  Losses  Involved. — But  because  the  Band  had  selected 
as  far  as  possible  American  manufacturers  who  were  at  best 
novices  in  exporting,  it  was  a  matter  of  years  before  sufficient 
complaints  reached  export  associations,  organizations  and  credit 
bureaus,  and  months  after  the  first  information  reached  these 
sources  of  credit  data,  before  it  could  be  clearly  proved  that 
definite  fraud — organized  fraud — had  been  employed.  Natu- 
rally the  Blank  Band  did  not  anticipate  that  they  could  continue 
operations  indefinitely  in  the  same  locations,  and  in  consequence, 
by  the  time  their  scheme  was  disclosed  they  had  added  new 
members,  changed  names  and  changed  cities,  and  built  up  a  new 
series  of  references.  That  the  amount  was  large  is  a  matter  of 
common  knowledge.  The  exact  amount  of  the  losses  will  prob- 
ably never  be  known.  Only  recently,  a  now  prominent  Middle 
Western  importer  confessed  that  he  was  victimized  by  the 
Black  Band  but  had  never  reported  the  loss  to  any  organization. 

Apart  from  the  field  of  fraudulent  endeavor  in  which  goods  are 
secured  and  payment  is  never  made,  it  is  of  interest  to  turn  to  the 
field  of  advertising.  Thanks  to  the  wonderful  change  brought 
about  by  the  data  covered  by  the  Bureau  of  Foreign  and  Domes- 
tic Commerce,  export  organizations  and  some  of  the  most  pro- 
gressive advertising  agencies,  the  export  world  knows  today  almost 


FRAUDULENT  EXPORT  SCHEMES  387 

the  exact  list  of  media  available  in  foreign  fields.  It  must  be 
remembered  that  a  dozen  years  ago  this  was  not  the  case.  Then 
there  was  little  accessible  information  on  file  in  the  United  States 
in  regard  to  the  newspapers  and  magazines  published  in  other 
countries. 

An  Advertising  Scheme. — A  foreign-born  resident  of  the  United 
States  took  advantage  of  this  unhappy  ignorance  and  solicited 
advertising  for  an  elaborate  weekly  magazine  which,  in  theory 
but  not  in  fact,  was  published  in  Lima.  Armed  with  a  copy  of 
this  magazine,  which  had  been  innocently  printed  in  the  United 
States  and  which  contained  full-page  advertisements  of  a  dozen 
leading  American  manufacturers  and  forty  more  less-known  to 
fame,  this  crook  solicited  advertising  at  really  rather  high  rates, 
even  if  the  forged  statements  of  circulation  were  to  be  believed. 
Again  the  argument  was  a  simple  one — "if  so-and-so,  and  so-and- 
so,  and  so-and-so,  whose  lines  are  sold  all  over  the  world,  think  so 
highly  of  this  publication  that  they  order  full  pages,  surely  you 
cannot  go  wrong  in  capitalizing  for  yourself  the  result  of  their 
extensive  investigations  as  to  the  best  media  in  Latin  America." 
Usually  a  crook  required  25  per  cent  of  the  contract  on  proof  of 
publication,  and  urged  immediate  action  because  an  edition  was 
about  to  go  to  the  press.  By  working  with  remarkable  rapidity 
the  crook  signed  up  over  eighty  pages  of  advertising,  ran  off  a 
second  edition  and  presented  copies  in  person  showing  the  adver- 
tisement, making  his  collection  on  the  spot. 

Needless  to  say,  the  first,  or  "bait,"  and  the  second,  or  "proof," 
editions  were  all  that  ever  appeared. 

A  Successful  Imitator. — So  successful  was  this  simple  plan 
that  it  was  copied  only  a  few  years  later,  although  this  time  the 
crook  made  a  greater  profit  because  he  chose  an  imaginary  news- 
paper in  Rio,  and  consequently  cut  his  printing  costs  down  to  a 
minimum.  Again,  only  two  "editions"  were  published  before 
the  crook  vanished.  But  the  climax  came  half-a-dozen  years  ago 
when  a  plausible  and  ingenious  crook  brought  out  a  very  hand- 
somely bound  magazine  which,  according  to  the  plan,  was  to  be 
printed  in  New  York  and  published  quarterly,  forty  thousand 
copies  to  be  distributed  to  a  list  which  had  evidence  of  being  most 
carefully  compiled.  This  time,  instead  of  novices  the  crook  had 
the  audacity  to  tackle  experienced  exporters  at  the  start,  and 
because  his  list  was  really  wonderful  in  its  completeness  he  was 
able  to  prove  that  in  city  after  city  he  had  not  only  the  names  of 


388  EXPORT  MERCHANDISING 

the  leading  inaniifa(;tiirers'  best  customers,  but  scores  of  other 
names  which  proved  on  investigation  to  be  in  every  case  those 
of  most  desirable  types  of  accounts. 

The  real  genius  of  the  crook  came  in  the  quickness  with  which 
he  operated,  because  he  told  these  leading  manufacturers  that  he 
would  guarantee  through  various  official  and  semi-official  con- 
nections, orders  of  sufficient  size  so  that  the  profits  from  these 
orders  would  more  than  pay  for  the  advertising,  and  in  his  con- 
tracts only  a  nominal  sum  was  requested  as  advance  payment, 
and  this  sum— usually  5  per  cent  of  the  total — was  to  be  paid 
only  on  proof  of  publication  and  after  they  had  received  at 
least  one  order.  Further  instalments  were  to  be  paid  only  from 
the  profits  gained  from  sales  to  governmental  bureaus  throughout 
the  world  after  shipments  had  been  made  and  accounts  paid  in 
full. 

"Big  Business"  Used  as  Bait. — It  would  hardly  be  fair  to 
give  names  here,  but  because  it  involved  only  such  a  small  pay- 
ment— a  sum  so  small  that  it  obviously  would  not  represent 
more  than  an  infinitesimal  fraction  of  the  cost  of  this  elaborately 
bound  and  handsomely  printed  and  illustrated  magazine — 
contracts  were  signed  by  a  number  of  the  most  experienced 
exporters.  With  these  bona-fide  contracts  in  hand,  the  crook 
sought  his  real  prey — firms  who  were  entirely  willing  to  follow 
in  the  exact  footsteps  of  the  internationally  famous  merchan- 
disers who  had  already  signed  up.  Of  course,  in  looking  back 
upon  this  plan  it  can  be  seen  that  the  secret  of  its  success  lay 
in  the  fact  that  this  astute  crook  let  each  experienced  export 
manufacturer  practically  dictate  his  own  individual  terms  of 
payment.  In  consequence,  when  the  real  victims  wrote  and 
asked  the  experienced  exporters  for  their  opinion  of  the  plan, 
these  wise  gentlemen  replied  simply  that  the  plan  rather  appealed 
to  them  as  it  had  been  presented,  and  that  they  had  decided  to 
give  it  a  trial,  each  one  chuckling  to  himself  when  he  thought  of 
his  own  wonderful  ability  to  make  a  special  deal  that  protected 
himself  against  loss  and  surely  showed  signs  of  security  for  him- 
self profits  otherwise  unobtainable.  Again  it  was  a  case  of 
only  two  editions.  The  experienced  exporter  as  a  rule  lost 
nothing,  and  the  rank  and  file  were  well  shorn. 

Defense  against  Advertising  Fakers. — The  defense  against 
this  type  of  fraud  is  based  on  a  careful  study  of  the  proposal. 
The   experienced    manufacturers   can    be   forgiven   for   signing 


FRAUDULENT  EXPORT  SCHEMES  389 

contracts,  because  the  crook  actually  did  show  an  unusual 
accurate  knowledge  of  market  after  market,  and  in  addition  to 
the  list,  which  in  itself  would  have  been  worth  many  thousands 
of  dollars  to  any  large  exporter,  a  keen  comprehension  of  the 
inside  workings  of  governmental  purchases  in  many  of  the 
Latin-American  countries.  Experienced  exporters  who  had  for 
years  banged  their  heads  unsuccessfully  against  the  wall,  were 
shown  the  reason  why  their  efforts  had  not  been  successful,  and 
were  given  a  glimpse — and  only  a  glimpse — of  the  reason  why 
they  would  be  favored  with  orders  if  they  tied  up  with  this  plan. 
But  the  group  who  paid  the  promoter's  bills  and  made  him 
presents  totalling  into  the  tens  of  thousands  have  less  excuse, 
because  in  no  case  had  they  received  hearty  recommendations 
when  they  wrote  references,  and  this  should  have  resulted  in 
further  correspondence  which  ultimately  would  have  disclosed 
the  exact  situation,  and  shown  them  that  the  names  used  as 
references  were  being  extended  purely  normal  rates  for  the 
advertising  space. 

THE  EGYPTIAN  SIGHT  DRAFT  FRAUD 

One  of  the  most  successful  individual  fraudulent  export 
schemes  is  known  to  veteran  exporters  as  the  "Egyptian  Sight 
Draft  Fraud."  It  is  best  described  by  a  simple  narrative. 
John  Jones  &  Co.,  American  manufacturers,  received  a  letter 
from  Cairo  from  one  Henry  Smith,  whose  letterhead  showed  that 
he  had  been  established  in  Cairo  for  five  years  and  that  he  was  an 
importer  of  a  fairly  wide  variety  of  English-,  French-,  Italian- 
and  American-made  articles.  The  letter  asked  for  prices  and 
terms,  told  frankly  of  his  intention  to  test  the  market  with  the 
American  manufacturer's  article  and,  if  the  test  showed  sales 
possibilities,  later  on  to  ask  for  an  exclusive  agency.  It 
requested  that  the  American  manufacturer,  in  case  he  was  not 
already  directly  represented  in  Egypt,  refrain  from  making 
any  connections  until  the  test  had  been  made. 

After  his  letter  had  been  answered  he  sent  in  an  order  for  a 
modest  amount,  accompanied  by  remittance.  A  second  and 
larger  order  followed,  also  accompanied  by  remittance.  Then 
Henry  Smith  sent  in  an  extremely  large  order,  with  the  request 
that  it  be  filled  only  in  case  the  manufacturer  was  prepared 
to  tie  up  for  five  years  and  grant  sight  draft  attached  to  bill  of 


390  EXPORT  MERCIIANDISINO 

lading  terms  which,  as  he  carefully  explained,  involved  payment 
only  on  delivery.  He  enclosed  with  this  letter  a  simple  contract 
in  duplicate,  both  copies  signed  by  him,  and  requested  the 
manufacturer  to  sign  both  copies,  retaining  one  and  mailing  hifri 
the  other,  with  signature  properly  witnessed.  The  contract 
called  for  a  pleasing  volume  of  purchases,  increasing  each  year, 
and  called  for  the  sole  agency  for  Egypt,  all  shipments  to  be 
made  by  him,  and  the  American  manufacturer  to  refrain  from 
correspondence  with  or  sales  to  any  other  firm  in  Egypt. 

The  stage  was  now  set  and,  apart  from  those  who  know  the 
fraud  itself,  probably  scarcely  one  in  ten  would  see  in  this  simple 
set  of  transactions  anything  that  was  foreboding.  The  usual 
cancellation  clauses  were  present  and  no  flaw  was  to  be  seen. 

The  Trap  Is  Set.^ — By  the  mail  following  the  one  that  carried 
the  duplicate  contracts  the  crook  placed  an  order  through  an 
innocent  New  York  commission  house,  calling  for  this  manu- 
facturer's goods  and  giving  a  shipping  mark  which  included  the 
word  "Alexandria."  Thus  it  came  about  that  while  the  signed 
contracts  were  on  the  way  back  to  Egypt,  an  innocent-looking, 
insignificant  order  came  in  from  the  New  York  commission  house 
and  was  filled  in  the  usual  way,  without  thought  that  it  concealed 
a  powerful  explosive.  The  manufacturer,  following  instructions, 
made  immediate  shipment  to  Henry  Smith  of  the  items  in 
stock,  drawing  on  him  with  sight  draft  attached  to  documents. 
In  the  meantime,  along  went  the  small  order  through  the  New 
York  commission  house.  This  ended  the  American  end  of  the 
transaction. 

The  Trap  Is  Sprung. — The  scene  was  then  changed  to  Egypt. 
On  the  arrival  of  the  small  shipment  by  the  New  York  commission 
house  to  an  accomplice  of  Henry  Smith,  this  crook  brought  suit 
for  breach  of  contract,  based  on  the  actual  document  which  he 
presented  in  court,  which  prohibited  the  American  manu- 
facturer, John  Jones  &  Co.,  from  making  any  sales  in  Egypt 
except  through  Henry  Smith.  The  agent  claimed  damages 
of  many  times  the  value  of  his  own  large  shipment  and  demanded 
that  the  shipment  made  with  sight  draft  attached  to  bill  of 
lading  be  seized  to  satisfy  his  claim.  Because  the  breach  of 
contract  was  obvious  and  ignorance  of  the  law  excuses  no  one, 
John  Jones  &  Co.  emerged  from  the  conflict — and,  in  facty^ 
were  unwise  in  contesting  the  suit — with  the  deficit  of  several 
thousand    dollars    and    a    saddening    experience    in    exporting. 


FRAUDULENT  EXPORT  SCHEMES  391 

This  loss  could  not  have  been  avoided  by  foresight.  It 
must  be  admitted  that  the  crook,  Henry  Smith,  had  patience  as 
well  as  ingenuity,  since  he  had  established  an  excellent  record 
for  himself  in  Cairo,  and  for  five  years  his  local  and  international 
record  was  one  of  prompt  payments  and  business-like  attention 
to  all  details.  In  consequence,  credit  investigation  showed 
everything  in  his  favor  and  nothing  against  him.  It  must  be 
admitted  that  the  loss  was  not  due  to  corrupt  administration  of 
justice,  because,  beyond  the  perfectly  natural  sympathy  with  a 
fellow-citizen,  there  was  nothing  in  the  transaction  for  the  court 
to  consider  beyond  the  clear  facts  of  the  case. 

Sound  Technique  a  Perfect  Defense. — The  defense  is  one 
which  depends  not  upon  suspicion  but  upon  thoroughness  in 
exporting.  The  moment  John  Jones  and  Co.  (the  Ameri- 
can manufacturer)  began  seriously  to  consider  Henry  Smith  as  a 
possible  agent,  they  should  have  examined  into  their  records  of 
indirect  as  well  as  direct  shipments  to  Egypt,  so  as  to  capitalize 
these  in  agency  arrangements.  Further  than  this,  the  moment 
they  signed  the  agency  arrangement  they  should  have  placed  a 
red  flag  against  all  communications  and  transactions,  direct  or 
indirect,  involving  Egypt,  including  an  analysis  of  their  export 
file.  This  would,  of  course,  have  caught  the  commission  house 
order,  whether  placed  through  their  New  York  office  or  at  their 
inland  factory. 

If  John  Jones  &  Co.  had  acted  wisely,  they  would  have  gone 
more  slowly  in  connection  with  the  contract.  They  would  have 
suggested  a  changed  wording,  permitting  them  to  make  direct 
and  indirect  shipments  to  Egypt  at  prices  protecting  the  agent, 
with  a  commission  arrangement  which  would  make  these  direct 
and  indirect  shipments  profitable  to  the  agent. 

A  Recent  Unusual  Fraud. — The  next  episode  is  chosen  from 
the  few  interesting  fraudulent  successes  during  recent  years. 
It  illustrates  the  dangers  of  the  unusual  and  emphasizes  the  weak- 
ness of  the  manufacturer  whose  export  technique  is  faulty.  The 
most  prominent  firm  in  the  United  States  in  its  chosen  line  was 
the  victim.  This  enterprise  markets  a  single  article  which, 
without  contracts  of  any  kind,  nevertheless  enjoys  a  rigidly 
maintained  re-sale  price,  and  which  is  sold  to  the  trade  at  a  fixed 
scale  of  discounts.  This  leader  in  American  industry  several 
years  ago,  at  a  time  when  European  export  trade  was  almost  neg- 
ligible because  of  the  handicaps  of  war,  was  visited  by  a  man  who 


392  EXPORT  MERCHANDISING 

presented  a  card  which  read,  "International  Polylingual  Export 
Co.  of  New  York."  The  name  given  is  fictitious,  used  here  to 
prevent  the  possibility  of  unfair  confusion  with  that  of  any 
substantial  enterprise. 

For  a  solid  half-hour  the  officer  of  the  export  corporation 
talked  about  his  company  and  its  sales  plan.  He  showed 
a  convincing  knowledge  of  the  weaknesses  of  the  average  Ameri- 
can selling  plan  and  pointed  out  neglected  market  after  neglected 
market.  He  emphasized  the  manner  in  which  his  company  was 
specializing  in  the  many  nooks  and  corners  of  the  world  where 
there  is  not  the  competition  rampant  which  is  the  case  with 
the  world's  capitals.  He  paused  suddenly  in  the  midst  of  a  gene- 
ral description  of  his  enterprise  and  the  neglected  markets  one  it 
served,  and  offered  to  pay  cash  on  delivery  for  hundred  thousand 
cases,  provided  he  was  extended,  in  addition  to  the  cash  discount,  a 
price  that  would  make  it  worth  his  while.  He  pointed  out  that 
he  had  described  his  corporation  and  its  methods  of  operation. 
An  order  was  placed  and  accepted,  and  a  15  per  cent  inside  price 
was  given,  as  the  manufacturer  mentally  charged  off  this  to 
*'  introductory  expense  in  markets  in  which  we  need  distribution." 

An  Unexpected  Ending. — ^It  is  a  perfectly  fair  question  to  ask, 
"What  fraud  can  possibly  lie  in  this  cash-in-New  York  trans- 
action?" The  answer  is  simple.  All  of  the  long  exposition  in 
regard  to  neglected  markets  was  simply  to  throw  the  export 
manager  off  his  guard.  The  goods  were  bought  to  be  sold  in  the 
domestic  market.  Because  the  manufacturer  had  a  rigidly- 
maintained  trade  price,  and  the  line  had  a  standard  retail  price, 
the  schemer  could  turn  over  the  one  hundred  thousand  cases  with- 
out difficulty  on  a  5  per  cent  cut  over  the  best  domestic  quality 
price,  and  still  have  practically  10  per  cent  net  profit. 

Correct  Export  Policy  as  a  Defense. — The  defense  against 
this  is  so  simple  that  it  hardly  needs  explanation.  No  manu- 
facturer should  permit  any  export  policy  that  does  not  include  a 
definite  knowledge  that  goods  bought  for  export  shipment  other 
than  by  the  manufacturer  himself  must  be  the  subject  of  a  special 
agreement  showing  the  country  to  which  goods  are  to  be  shipped. 
This  is  manifestly  a  necessity,  both  from  the  standpoint  of  domes- 
tic and  from  the  standpoint  of  export  policy.  Surely  the  good 
export  manager,  not  blinded  by  this  type  of  ingenious  plan,  must 
realize  that  he  owes  existing  customers  and  agents  protection 
against  indirect  shipments,  and  surely  every  American  manu- 


FRAUDULENT  EXPORT  SCHEMES  393 

facturer  should  be  most  careful  that  no  undermining  possibility 
exists  which  will  affect  his  domestic  trade  by  any  export  trans- 
action. One  other  American  manufacturer  learned  this  truth 
when  in  his  misguided  efforts  to  gain  export  supremacy  he  priced 
his  goods  so  low  for  foreign  sales  that  he  was  outwitted  by  a  New 
York  pirate  who  bought  goods,  which  were  shipped  to  Bermuda 
and  thence  back  to  New  York,  paying  the  nominal  duty  and  then 
underselling  the  manufacturer  right  and  left  within  100  miles  of 
the  factory. 

The  Mexican  Bandits.^ — Reverting  a  moment  to  the  sight 
draft  shipment  as  offering  opportunity  for  fraud,  there  are  those 
who  remember  some  years  ago  when  they  shipped  goods  with 
sight  draft  attached  to  documents,  to  inland  Mexico,  and  had  the 
misfortune  to  have  the  freight  train  carrying  these  goods  robbed 
"somewhere  in  Mexico, "  and  found  that  they  were  not  protected 
against  theft  in  transit.  It  may  surprise  these  men  to  know  that 
the  customers  who  ordered  the  sight  draft  shipments  were 
intimately  acquainted  with,  if  not  direct  relations  of,  the  train 
robbers. 

Little  sympathy  should  be  extended  in  this  particular  set  of 
cases,  because  credit  investigations  would  have  shown  that  the 
Mexican  firm — which,  by-the-way,  had  an  English-sounding 
corporation  name,  wrote  in  English  and  invariably  addressed 
their  letter  to  the  president  of  the  manufacturing  company — 
had  a  bad  credit  record.  The  usual  introduction  was  an  apology 
for  addressing  the  president,  and  giving  as  a  reason  for  addressing 
him  their  appreciation  of  his  able  speech  at  a  recent  trade  con- 
vention. It  may  be  that  the  credit  man  should  not  be  blamed 
after  all,  because  in  one  case,  at  least,  the  highly  flattered  presi- 
dent overruled  the  credit  department  and  insisted  that  the  goods 
be  shipped. 

THE   PERNAMBUCO   TRIANGLE 

In  the  catalogs  of  export  crime,  the  cleverest  example  of  frau- 
dulent export  scheming  is  always  listed  as  the  "Pernambuco  Tri- 
angle." In  the  years  since  it  came  and  went,  nothing  has 
earned  an  equal  place  in  the  collection  of  connoisseurs  of  export 
crookedness. 

A  typical  example  of  the  workings  of  the  "Triangle"  is  given 
in   detail.     "Thomas   Robinson  &   Co.,"   an  American   manu- 


394  EXPORT  MERCHANDISING 

facturing  exporter,  received  an  order  from  the  Anglo-Brazilian 
Merchandise  &  Export  Co.  of  Pernambuco.  Naturally,  this  is 
an  assumed  name.  This  order  was  for  a  very  modest  amount. 
It  comprised  an  assortment  of  the  leading  staples  and  specialties. 
The  order  was  on  a  letterhead  giving  the  names  of  prominent 
European  manufacturers,  including  a  world-known  English 
glove  line,  a  world-known  refiner  of  olive  oil,  a  world-known 
French  maker  of  perfumes  and  a  world-known  Irish  bottler  of 
ginger  ale.  In  the  body  of  the  letter  the  names  of  three  promi- 
nent English  houses  were  given  as  references,  together  with 
"The  Pernambuco  Mercantile  Agency." 

The  Second  Angle  Seen.^ — ^Several  variations  are  now  pos- 
sible. In  many  instances,  as  the  order  was  of  comparatively 
small  size  and  the  letter  a  gem  of  wordcraft,  the  American  manu- 
facturer shipped  the  order  by  first  sailing,  as  suggested.  The 
seven-day  sight  draft  attached  to  documents  was  accepted,  but 
not  paid  at  maturity.  In  the  same  mail  that  carried  the  bank's 
report  of  the  failure  of  the  drawee  to  make  payment,  a  letter 
came  from  the  Pernambuco  Collection  Agency.  There  can  now 
be  seen  all  three  factors.  In  a  moment  will  be  seen  the  reason 
for  the  title,  "The  Pernambuco  Triangle." 

The  letter  from  the  Pernambuco  collection  agency  read  in 
part  as  follows: 

"It  has  come  to  our  knowledge  that  you  have  unwisely  made  a  ship- 
ment of  your  merchandise  to  the  Anglo-Brazilian  Merchandise  & 
Export  Co.  of  this  city.  We  have  already  in  our  hands  for  collection  a 
number  of  accounts  against  this  very  company.  The  credit  record  of 
this  firm  is  not  impressive,  and  it  is  a  matter  of  local  record  that  other 
foreign  houses  have  made  shipments  to  them  which  have  not  been 
paid  for. 

"It  is  quite  possible,  however,  that  we  can  be  of  service  to  you, 
nevertheless,  because  we  have  recently  found  certain  assets  which  have 
been  illegally  transferred  to  the  officers  of  the  company;  and  if  you  so 
desire  we  will  join  your  name  with  those  of  other  clients,  in  a  suit  we 
are  bringing.  Our  fee  for  this  will  be  50  per  cent  of  the  total  amount  of 
your  invoice,  25  per  cent  to  be  paid  in  advance  and  no  further  payment 
to  be  made  unless  your  claim  is  collected  in  full." 

Many  American  manufacturers  paid  this  25  per  cent. 

The  Triangle  Completed. — Manufacturers  who  shipped  the 
goods  lost  goods,  freight  and  other  charges.  Manufac- 
turers who,  after  they  had  shipped  goods,  listened  to  the  voice 


FRAUDULENT  EXPORT  SCHEMES  395 

of  the  siren,  lost  25  per  cent  more,  because  the  suit  against  the 
Anglo-Brazihan  Merchandise  &  Export  Co.  was  unsuccessful. 
But  it  is  not  even  the  ingenuity  of  these  two  angles  of  the  tri- 
angle which  appeals  to  the  humorous  side  of  many.  It  is 
rather  that  the  Pernambuco  Mercantile  Agency  was  given  as  a 
reference.  Those  who  quite  wisely  did  not  make  shipment  but 
wrote  references,  found  that  the  English  houses  named  had  had 
correspondence  but  no  business  transactions  with  the  Anglo- 
Brazilian  Merchandise  &  Export  Co.  They  also  received  a 
neatly-typed  credit  report  from  the  Pernambuco  Mercantile 
Agency.  With  this  credit  report  was  enclosed  a  bill  for  $2  for 
the  report. 

The  High  Mortality  Rate. — Every  single  American  manu- 
facturer in  this  division  who  has  been  traced  cheerfully  paid  this 
$2,  and  applauded  his  own  good  judgment  in  using  business 
caution  and  not  making  shipment  before  he  had  made  investiga- 
tions. Until  the  whole  plan  was  exposed  not  one  of  these  sus- 
pected for  a  moment  that  the  overhead  cost  of  correspondence 
and  a  neat  profit  beside  was  being  made  by  the  crook,  whose 
two  side  lines  were  the  Pernambuco  Mercantile  Agency — credit 
reports  a  specialty — and  the  Pernambuco  Collection  Agency. 
The  defense  against  the  Pernambuco  Triangle  is  so  utterly 
obvious  that  no  one,  apparently,  even  thought  of  a  check  upon 
the  $2  credit  report  fee,  or  thought  of  escaping  it.  And  yet,  all 
anyone  needed  to  do  was  to  write  to  his  chosen  export  organiza- 
tion and  ask  regarding  the  existence  of  the  Pernambuco  Mercan- 
tile Agency  and  of  its  reputation,  if  any. 

No  tale  of  fraudulent  export  schemes  would  be  complete 
without  the  recital  of  one  that  starts  inland  in  the  United 
States  and  ends  inland  in  Central  America.  In  ingenuity, 
although  not  in  variety,  it  rivals  the  Pernambuco  Triangle.  In 
the  money  total,  it  ran  far  beyond  the  Pernambuco  Triangle. 

THE  PIRATE  SHIP 

A  long-established  house  in  New  York  decided  to  go  wrong. 
It  therefore  prepared  a  tramp  steamer  (known  ever  since  in  export 
circles  as  "The  Pirate  Ship"),  hired  a  disrated  band  of  cut- 
throats as  a  crew  and,  with  yawning  holds,  awaited  the  result 
of  the  warped  minds  of  the  headquarters  crooks.  These  now 
out-and-out  criminals  sent  orders  to   dozens  upon   dozens  of 


396  EXPORT  MERCHANDISING 

American  manufacturers  for  goods  which  showed  most  pleasing 
profits  to  these  makers.  These  goods  were  ostensibly  for 
direct  shipment  consigned  to  foreign  merchants,  together  with 
drafts  on  these  merchants  endorsed  by  the  manufacturer  to  the 
long-established  house  in  New  York.  The  steamer  was  loaded, 
departed  ostensibly  across  the  Atlantic,  but  actually  raced 
for  Central  America.  The  crooks  faded  from  sight  with  the 
steamer. 

After  a  while  came  inquiries  to  the  sole  and  innocent  clerk 
hired  to  keep  the  office  open  so  that  mail  would  not  be  returned 
unclaimed.  The  clerk,  acting  under  instructions,  acknowledged 
these  letters,  saying  truthfully  that  the  principals  were  out  of 
town  on  a  business  deal. 

Why  the  Losses  Were  Multiplied. — Then  came  the  thunderbolt. 
In  inland  city  after  inland  city  banks  presented  the  drafts  and 
requested  payment.  Puzzled  exporters  explained  to  their  banks 
that  they  were  not  the  ones  to  make  payment,  that  the  drawees 
whose  names  appeared  on  the  face  had  been  shipped  goods  and 
that,  of  course,  the  drawees  would  make  payment;  and  that  the 
banks  would  then  give  the  money  to  the  exporters  who  drew  the 
drafts.  This  seemed  entirely  reasonable  to  the  exporters,  but 
not  so  to  the  banks,  for  every  draft  had  been  discounted  by  the 
New  York  crooks!  Every  single  manufacturer  faced  not  only  the 
loss  of  the  goods,  but  also  the  full  invoiced  value  of  the  goods 
sold. 

The  perpetrators  of  this  outstanding  fraud  were  aided  by  their 
past  legitimate  transactions;  their  standing  in  credit  circles; 
the  general  ignorance  in  export  circles  of  the  exact  ways  in  which 
their  own  drafts  were  handled,  and  by  inertia  which  took  for 
granted  that  the  transaction  involved  was  one  in  which  goods 
could  only  be  surrendered  against  payment  to  bank.  It  must  be 
realized  by  every  American  exporter  that  there  is  a  vast  difference 
between  the  theft  of  goods  by  a  transportation  company  of 
established  standing  and  careless  handling  of  drafts  which  permits 
that  discounting  without  forgery.  It  is  a  legitimate  business  risk 
to  entrust  the  forwarding  of  merchandise  to  those  established  for 
that  purpose.  It  is  a  legitimate  business  risk  to  entrust  collec- 
tion of  foreign  accounts  to  banks  of  earned  standing.  But 
it  never  was  and  never  will  be  sound  merchandising  to  place 
unnecessarily  in  the  hands  of  a  second  party  either  blank  checks 
or  unprotected  drafts. 


FRAUDULENT  EXPORT  SCHEMES  397 

The  Judicial  Attitude  Essential. — These  concrete  examples  of 
successful  fraudulent  export  endeavor  are  not  given  as  a  warning 
against  engaging  in  export  trade  or  employing  all  the  many- 
valuable  aids  offered  through  legitimate  channels.  The  exporter 
who  will  but  adopt  a  judicial  attitude  toward  all  proposals  and 
who  will  use  the  same  type  of  common  sense  precautions  that  he 
employs  in  the  domestic  market  will  secure  himself  against  losses 
by  fraud. 

Export  trade,  with  the  fraudulent  thus  checkmated,  offers  the 
master-opportunity  for  the  American  manufacturer. 


INDEX 


Addresses,  mail,  122,  132 
Adjustments,  152 
Advance  card,  salesman's,  111 
Advertising,   22,   28,   33,    111,    118, 
163-177,  297,  298,  306,  309, 
310,    315,    316,    386,    387, 
388,  389 
Advertising,  American,  163 
appeal,  175 
appropriation,  169 
atrocities,  176,  177 
business  cards,   166 
campaigns,  167,  168,  169,  170 
combined  with  sampling,  167 
common  mistakes,  174,  175 
copy,  175,  176,  177 
export  journals,  22,  28,  29,  173, 

175 
fraudulent,  167,  387,  388,  389 
fundamentals,  167 
Kahler's  definition  of,  171,  172 
twenty-two    methods    of    use, 
166,  167 
"Advertising  and  Selling,"  vii 
Advertising   manager,    58,    66,    168 
Agency  contract  (See  contract). 
Agent,  exclusive  export,  319-347,  374 
Agreement  (See  contract). 
Allied  company,  23 
American  Academy  of  Political  and 

Social     Science,     vii 
American     Manufacturers     Export 

Association,  372 
American     Manufacturers     Foreign 
Credit  Insurance  Exchange, 
373,  374 
Appropriation,  campaign,  315,  316 
export  advertising,  33 
department,  30 
sales,  30 


Appropriation,  unlimited,  37,  38 
Austin,  O.  P.,  84 


B 


Black  Band,  384,  385,  386,  387 

Bonding,  121 

Boston  Export  Round  Table,  vii,  372, 
373 

Bradstreet,  104,  331,  371 

Budget  (See  Appropriation). 

Bureau  of  Foreign  and  Domestic 
Commerce,  vii  70,  105, 
121,    287,    312,  386 

"Business,"   vii 

"Business    Training    Corporation," 


Cable  codes,  126 
Cable  collect  cards,  125 
Cables,  addresses,  132 
Cabling,  133 

Campaigns    (See  also  Samples),  280 
-318 

building  up,  282,  283 

costly  errors,  295 

good  will,  284,  285 

intensive,  287 

introductory,  301-307 

planning,  280-293 

sampling,  288 

specialty,  308-318 

typical,  294-307 

unsuccessful,  298,  299 

world  wide,  283,  284 
Capability,  363 
Capital,  364 

Carter's  Ink  Company,  The,  Frontis- 
piece, 64 


399 


400 


INDEX 


Cash  discount  {See  Discount). 
Catalog,  bound  in  vs.  loose  leaf,  21.3 
as  a  salesman,  204-216 
common  errors  in,  211 
covers,  205 

European  vs.  American,  207 
export  vs.  domestic,  205 
functions,  204 
how  to  check,  214,  215,  216 
illustration,  207,  208 
relation  to  salesmen,  210 
size,  206 
stock,  205 

translation  of,  211,  212,  213 
Catalogs,  29,  32,  204-216 
Chamber  of  Commerce  of  U.  S.  A., 

375,  376 
Chambers  of  Commerce,  27 
Chapman,  John,  178 
Character,  363 
Charts,  14,  274,  275,  276 
Chemists,  67,  74 

Cinematograph     {See    Motion    pic- 
tures). 
Circularizations     {See    Correspond- 
ence). 
Collections,  150,  151,  377-383 
Columbus  Memorial  Library,  376 
Combination  export  manager,  86-93 
Combination  export  salesman,  140- 
146 
as   agent,   319,   321,  324 
financing,  146 
qualifications,  144 
resident  abroad,  140,  142 
salary,  145 
sub-leased,  144,  145 
traveling,  140,  141 
types  of,  140 
Commission  house,  export,    advan- 
tage of,  181,  182,  183 
cooperation  with  manufac- 
turer by,  178-203 
definition    of,    178 
function  of,  179,  184 
history  of,  180,  181 
methods  of,  178-203 
relation  to  importer  abroad, 
184-203 


Common  sense,  1-8 
Competition,  19,  20 
Conferences,  44,  45,  46,  73 
Consumer,  selling,  106 
Contract,  127,  343-347 
Control,  executive,  chart  plan,  14,  15 
conference  plan,  14,  15,  45,  46 
management,  64 
monthly  report  plan,  15 
results  plan,  15 
territorial  quota  plan,  15 
Cooper,  C.  P.,  140 
Correspondence,  30,  35,  36,  37,  78, 
79,  111,  122,  147-162,  193, 
194,  317,  378,  380,  382 
Correspondence,  adjustment  letters, 
152 
collection  letters,  150,  151 
construction  of  sales  letters,  153 
diagnosis  the  dominant  factor, 

158,  159,  160 
enclosures,  156,  157,  158 
every  letter  a  sales  letter,  150 
examples  of  sales  letters,   159, 

160,  161 
form  sales  letters,  154,  155,  156 
importance     of    pen    and    ink 

signature,  149 
"intermediate    letters,"    162 
letter  series,   157 
routine  letters,    151 
sales   letters,    151 
translation  of,  152 
use  of  prospective  customer  lists, 
156 
Costs,    factory,     17 
production,  17 
selling,  17 
Credit  losses   {See  Credits). 
Credit  manager,   58,   59,   331,   332, 

348-354,  367-370 
Credits,  foreign,  4,  21,  22,  25,  33,  77, 
330,  331,  348-354,  355-366 
"Current  affairs,"  vii 
Cushman,   Herbert  E.,  367 

D 

Demand,  creating  onsumer,  341 
Dental  examination,  119,  120 


INDEX 


401 


Depression,  domestic,  9 

"Direct  exporting,"  241 

Direct  selling,  20,  21 

Discount,  cash,  360,  361,  362 

Displays  {See  Samples  and  adver- 
tising). 

Donovan,  James  B.,  319 

Drafts,  documentary,  3,  9,  21,  360, 
378-379,  389 

Dudeney,  Frank  M.,  23 

Dumping,  10 

Dun,  R.  G.  Co.,  104,  331,  371, 
372 


E 


Eames,  Robert  M.,  308 

Egyptian    Sight    Draft  Fraud,  389- 

391 
Enclosures,      envelope,      156,      157, 

158 
Enclosures     {See     Correspondence). 
Entertainment     of     customers,     33 
at  factory,  49, 
at  seaboard,  48,  49,  50 
Equipment,  export  manager's,  28 
Erickson,  O.  T.,  329,  332 
European  methods,  44,  135,  207 
Expenses,  29,  95,  124,  145 
Exportability,  testing,  26,  27 
"Export       American     Industries," 

vii 
Export     Commission     Houses     {See 
also  Commission  Houses), 
178-203,  231,  319,  322 
Export  company,  319,  323,  324 
Export  department,  "built-in,"  25, 
56-67 
committee,  44,  45,  46 
conference  44,  45,  46 
location  of,  47-55 
Miller  Rubber  Company,  40, 

41 
separate,    24,  39,  40,  41,  42 
small,  43 

The  Carter's  Ink  Company, 
64-67,  22,  28,  29 
Export  journals,  164,  166,  168,  169, 
173,  175,  177 

20 


Export  manager,  33,  62,  68-85,  128, 

348-354,  367-370 
Export  manager,  combination,  86- 

93,  323 
Export  Managers  Club  of  New  York, 

vii,  372 
Export  merchant,  178 
Exporters'  Encyclopaedia,  127,  270, 

287 
Export    Trade,    vii,    56,  287 
Eytinge,  Louis  Victor,  134 


Federal  trade  commission,  20 

Filsinger,  E.  B.,  113,  287 

Follow  copies,  117,  122,  124,  161 

Follow  up,  134,  135 

Ford  Motor  Company,  267 

Formalities,  port,  121 

Form  letters  {See  Correspondence). 

Foreign  Credit  Interchange  Bureau, 

374,  375  {See  also  National 

Association  of  Credit  Men). 
Foreign  Finance,  manager,  66  {See 

also  Credit  manager). 
Forwarders,     foreign     freight,     34, 

35 
Fo  r  e  i  g  n      credits      {See     Credits, 

foreign). 
Fownes  gloves,  321 
Frankhn,  Benjamin,  49 
Franklin  Motor  Car,  267 
Frauds,  export,  173,  384^397 
Fraudulent  export  schemes,  384-397 
Funds,  salesman's,  124 


G 


Gallup,  Oren  O.,  384 
Garrett,  Arthur  T.,  217 
General  manager,  63 
Geography,  Commercial,  82 
Gillette  Safety  Razors,  321 
Goodrich     Tire    and    Rubber    Co. 

109 
Graphs,  15 


402 


INDEX 


H 


Hanson,  Harry  W.,  348 

Hess,  Herbert  W.,  284 

Honor,  381 

Hotclikiss,  George  Burton,  381 

House  Magazine  {See  House  organ). 

House  Organ,  66,  217-226 

articles,  224 

correct  use  of,  223 

editorial  policy,  223 

examples  of  misconceptions, 
221,  222 

function  of,  217 

fundamental  object  of,  217 

illustrations,  220 

mailing  list,  218 

text,  219 
Hurley,  Edward  N.,  ix,  329 


Importer,    general,    319,    324,    325 

Indian  motorcycles,  267 

Indirect  exporting  {See  also  Indirect 

selling). 
Indirect  selling,  20,  123,  178-203 
Inoculation,  120 
Insurance,  export  trade  as,  9,  10,  11 


Jackson,  B.  B,  40 

Johnson,  Herbert  B.,  86,  97,  280 


K 


Kahler,  Hugh  MacNair,  171,  172 
Kennedy,  Philip  B.,  163 
Kipling,  Rudyard,  282 


Labels,  52 

Languages  {See  Translations). 

"Leslies,"  vii 

Letters  of  authority,  126 

Letters  of  instruction,  126 

Letters  of  introduction,  126 


Letters  {See  Correspondence). 
Letters,  Sales  {See  Correspondence) 
Letter  series  (.S'ee  Correspondence). 
Lists  (*S'ee  Prospective  customer). 
Location     of     export     department, 
factory,  48 
seaboard,  47 
Long  credits  {See  Credits). 
Lough,  W.  H.,  6 


M 


Mahony,  Paul  R.,  94 
Mailing   list    {See  Prospective  cus- 
tomers). 
Manufacturer's  agent,  14,  179,  319, 

324 
Manufacturing  for  export,  16 
Maxwell,  Herbert  B.,  131,  204,  291, 

343 
Mcintosh,  C.  K.,  9 
Mexican  Bandits  Fraud,  393 
Millard's  Review,  287 
Miller  Rubber  Co.,  40,  41 
Misconceptions,  108 
"Modern     Methods,"    vii 
Morris,  Charles,  12 
Morse,  Henry  H.,  vii 
Morton,  R.  K.,  74,  270 
Motion  pictures,  227-240 

as  export  salesman's  assistant, 

234 
branch    houses    abroad,    232 
branch  office  equipment,  230 
creating    consumer    demand, 

236 
export  commission  house,  231 
in    educational    institutions, 

237 
portable    projector,    119,  227 
projector,  119,  229-240 
separate  film,  227 
use      by      agents      overseas, 

232 
uses  abroad,   227,  229,   230- 

240 
uses   in   United   States,   227 
228,  229 
Motometer,  267 


INDEX 


403 


N 


National  Association  of  Credit  Men, 
66,  351,  372,  374,  375 

National  Association  of  Manufac- 
turers, 70,  105,  287,  312, 
331,  371,  372 

National  Cash  Register,  268 

National  City  Bank,  84 

New  Year's  Greetings,  162 

O 

Office  manager,  60 
Organization,  5 

forms  of,  23 

inside  force,  39 

territorial,  40,  41 

The  Allied  Company,  23,  24 

The  "Built-in"  export  depart- 
ment, 23,  25 

The   Selling  Company,   23,   24 

The    separate    export    depart- 
ment, 23,  24,  39 


Packard  Motor  Car  Company,  109, 

258,  268 
Packing,  16,  52,  60 
Paige  Motor  Car,  267 
Pan  American  Union,  70,  105,  312, 

376 
Panics,  9,  10 
Pelham,  Thomas  W.,  1 
Pernambuco    Triangle   Fraud,  393- 

395 
Philadelphia  Commercial  Museum, 
70,  105,  287,  312,  331,  372 
Pinaud's    toilet    preparations,    321 
Pirate  Ship  Fraud,  395,  396 
Plans,  6,  26,  27,  270-279 
Pneumatic  Scale  Corporation,  265 
Policies,  export,  12-22 

advertising,  22 

credit,  21,  22 

executive  control,  14 

manufacturing,  16 

necessity  for,  12 

price,  17 


Pohcies,  sales,  20 

Portable  typewriter,  123,  124 

Postage,  30 

Power  of  attorney,  125 

Price-lists  {See  Catalogs). 

Pricing,  17,  18,  19,  20,  296,  297,  302 

"Printers'    Ink,"    vii 

Profit,  1,  9,  36,  80,  139,  157,  169,  272, 

359 
Prospective  customers,  27,  92,  110, 

111,  156,  218,  365,  366 
Prospective    customer   sheets,    115, 

116,  117 


Q 


Qualifications,    export    agent,     330 

manager,  68,  69 

salesman,  97 
Quaker  Oats  Company,  109 


R 


Records,  5,  62 
References,  258,  374 
salesmen's,  101 
Regal  shoes,  321 
Route  sheets,  121 

Routing,   salesmen,    121,    122,   128, 
129,   130 


S 


Safety  factor,   9 
Sales  manager,  72 

Salesmen,  4,  13,  31,  33,  35,  94-146, 
169,170,  172,173,291-311, 
319,  374 
export,      advertising     equip- 
ment, 118 
bonding,  121 
cable  codes,  126 
cable  collect  cards,  125 
character,  121 
combination,     140-146,    319, 

321,  324 
control,  131 

correction  of  weaknesses,  13„ 
correspondence,  122 


404 


INDEX 


Salesmen,  dental  examination,  119 

diet,  120 

equipment,  117 

etiquette  of  road,  114 

expenses,  124 
items,  124 

financing,  124 

first-aid  kit,  119 

follow-up  of  work,  134,  135 

funds,  124 

hand-colored  photographs   of 
products,  118 

health  precautions,  119 

knowledge  of  technique,  98 

importance  of   clerical   accu- 
racy by,  124 

letters  of  authority,  126 

letters  of  credit,  124 

letters  of  instruction,  126 

letters  of  introduction,  126 

library,  127 

linguistic  ability,  98 

mail,  132 

mail  addresses,  122 

models,  118 

motion  picture  projector,  119 

physical  examination,  119 

preparation  of,  94 

prospective  customer  sheets, 
115,  116,  117 

portable  typewriter,  123,  124 

power  of  attorney,  125 

qualifications,  97 

references,  101 

review  of  field  on  return,  136 

route  sheets,  121 

routing,  128,  129,  130 

samples,  117,  118,  243 

securing,  94,  95 

stationery,  127 

supervision,  131 

title,  132 

travellers'  checks,  124 

typhoid  inoculation,  120 

vaccination,  120 

wardrobe,  120,  121 
Samples,  29,  117,  118,  136,  241-257, 
288,  296 
agents,  244 


Samples,  agents,  cases,  243,  244 

consumers,  247 

displays,  243 

of  advertising,  243 

retailers,  246 

salesmen,  117,  118,  243 

sample  trunks,  242 

wholesalers  as  a  sales  argument, 
245 
Sanger    Edmands,    Bridgman,    108, 

184 
Sanger,  Edmands  Woodbridge,  47, 

283 
Sanger,  Frederick,  73 
Selling  agency,  319 
Selling  company,  23,  24 
Shaw,  A.  W.  Co.,  147 
Shibusawa,  Baron,  287 
Shipping  marks,  182 
Smith,  J.  Russell,  82 
Sources  of  information,  27,  70,  371- 

376 
Statistics,  83,  84 
Style  centers,  292 
Substitutions,  201 
Superintendent,  factory,  60,  67 
"System,"    vii,  58,  73,    159,   287 


T 


Technique,  113,  141 
Testimonials,  258-269 

capital  resources,  260 
Testimonials,  character  letters,  259 
chemical  and  mechanical  skill, 

264 
patented  and  secret  processes, 

265,  266 
personal  skill  of  workers,  264, 

265 
quality,  262 
reference,  258 
reverse,  268 

technical  knowledge,  261 
unusual  endorsements,  262-263 
Thurston,  G.  Morton,  136 
Titles,  in  export  department,  38,  39, 

41,42 
Tosdal,  Harry  R.,  vii 


INDEX 


405 


Towne,  Henry  R.,  290 

Traffic  manager,  67 

Training,     export      manager,     73- 

81 
salesmen,  94-107 
Translations,  4,  33,  69,  152,  211,  212, 

213 
Travelers'  checks,   124 
Tregoe,  J.  H.,  355 
Turn-over,  359 


Vaccination,  120 
Vedder,  George  C  ,  280 


Vose,  Edward  Neville,  82 
W 

War,  effects  of,  197 

Wardrobe,  salesman's,  120,  121 

Weatherbee,  Amos,  371 

Webb  act,  20,  87 

Webb,  association  managers,  87 

Whelpley,  James  Davenport,  294 

Williamson,  T.  H.,  68 

World  Almanac,  127 

"World's   Markets,"   vii,    287,   353 

"World's  Work,"  vii 

Wright,  T.  J.,  377 

Wyman,  Ferdinand  A.,  Jr.,  227 


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